10th Parliament · 1st Session
Mr. Speaker (Hon. Sir Littleton Groom) took the chair at 3 p.m. and rend prayers.
Despatch to the Solomon Islands.
– Can the Prime Min ister make any statement to the House regarding the expedition of the cruiser Adelaide to the Solomon Islands?
Mr.BRUCE. - I have no information later than thatwhich was published in the press on Monday to the effect that the Adelaide had arrived at the Solomon Islands, dropped a small number of her personnel at the point of arrival, picked up the Resident Commissioner of the district, and then proceeded to the scene the recent outrages where a party of naval ratings was landed on the beach merely for the protection of the base camp. All steps for the purpose of bringing to punishment those concerned in the outrage are being taken by the civil authorities.
– Has the Commonweath Government issued any instructions to the captain of the Adelaide since the arrival of the vessel at the Solomon Islands?
– The British Government merely requested that one of Australia’s cruisers should proceed to the scene of the recent outrages and stand by to cope with any emergency; also that a guard be landed for the protection of the base camp from which operations for bringing to justice the perpetrators of the outrage will be conducted. Instructions were issued to the captain of the Adelaide in accordance with that request.
– Can the Prime Minister give to the House any information regarding the operation of the Commonwealth Oil Refineries during the last twelve months ?
– Notices of the annual meeting of the Commonwealth Oil Refineries were sent out yesterday or the day before and they were accompanied by a balance-sheet, which was released to the press last night and no doubt was published throughout Australia this morning. I propose to table in the Library copies of the balance-sheet and report for the convenience of honorable members desirous of perusing them. The balance-sheet and profit and loss account disclose a trading profit for the year of approximately £112,000 of which £69,000 is available for distribution before providing for income tax, and £43,000 has been allocated to the depreciation account. In answer to a question some time ago I said that I would table the balance-sheet of the Commonwealth Oil Refineries and move that it ‘ be printed, but I find that the balance-sheet has never been tabled, because the company publishes its balance-sheet, and thus makes it available to every one.
– I ask the Minister for Home and Territories whether the new contract for the Canberra bus service has been signed, and, if so, by whom?
– We anticipate that it will be signed within the next few hours or the next few days.
– I ask the Prime Minister - 1.What is the date of the appointment of the members of the Australian Industrial Mission to the United States of America?
– The honorable member courteously informed me of his intention to ask these questions, and I am therefore able to furnish him with the following replies : -
The accounts have not yet been completed, but the total cost of the mission will, if the honorable member desires, be furnished to him at the earliest possible moment.
– The press recently published the statement that an apple famine “was likely in New South “Wales during November and December, and that, therefore, the Minister for Trade and Customs had been requested to lift the embargo upon the importation of apples. In view of the fact that in the United States of America and other countries the dread disease of fire blight is so prevalent that precautions have been taken in the past to keep it out of Australia, will the Minister give an assurance that the embargo on the importation of apples will not be raised during the months named.
– This question, which relates to quarantine, should have been addressed to the Minister for Health, but in his absence I am able to furnish the honorable member with a reply to it. There is an embargo against the importation of apples from the United States of America because of the prevalence in that country of the very serious disease known as fire blight. Recently application was made to the department to allow the embargo to be lifted. Inquiries will be made by the Departments of Trade and Customs and Markets and Migration, and entomologists will be consulted, and I assure the honorable member that this matter will be very carefully considered before the request is granted.
– When speaking on the second reading of the Red Hill to Port Augusta Railway Bill, the Minister for Works and Railways (Mr. Hill), said that a difficulty of a. technical nature had arisen, due to a. provision in a South’ Australian act that might stultify the proceedings of this Parliament. The honorable gentleman intimated that the matter had been the subject of a communication between the Prime Minister (Mr. Bruce) and the Premier of South Australia. Later, there appeared in the South Australian press the report that the hitch which had arisen affected the. extension of the north-south railway in the direction of Alice Springs, and cer tain honorable members who support the Government thereupon became jubilant. I ask the Prime Minister whether that technicality prevents the construction of the north-south railway, and what is the result of his inquiries?
– The matter was discussed by me with the Premier of South Australia (Mr. Butler), last week, and that gentleman has returned to Adelaide to consult his law officers regarding it. All that is involved is whether the wording of a South Australian act of Parliament is such as to prevent the Commonwealth Government from proceeding with the construction ofthe railway without obtaining the further consent of the Government of South Australia, and whether that Government has the power to grant such consent without first referring the question to Parliament and securing the amendment of the statute.
– I desire to found a question upon a communication received by me to the effect that Chinese residents within the Mandated Territory of New Guinea are placed in an invidious position, not only by reason of the prejudice that exists against their being engaged in industrial undertakings, but because - my informant, an authorative person, tells me - while technically free to take up land, actually no land is allocated to them. Is the Minister able to give me any information on the point? If not, will he make inquiries into the matter?
– I am unaware that hardships are inflicted on Chinese residents in the Mandated Territory of New Guinea by reason of their nationality. Land in that territory can be taken up only by natural or naturalized British subjects.
Purchase Of Bedsteads
– Has the attention of the Prime Minister been directed to a statement made before the Tariff Board in Sydney on Monday, the 17th instant, by Mr. Charles Reid, of the Sydney Bedstead Works, alleging that the Federal Capital Commission recently purchased from the United States’ of America 100 stretchers at 21s. each, and refused Mr. Reid’s tender for a better article at 17s. 6d. each? Will the Prime Minister indicate “whether it is the intention of the Federal Capital Commission to appear before the Tariff Board to explain this apparent inconsistency?
– My attention has not been drawn to the statement. If the honorable member would frame a question with a view to ascertaining the facts he would be fairer to the Federal Capital Commission than he was in putting the question as he did.
– By way of personal explanation let me say that I do not appreciate the rebuke which the Prime Minister seeks to give me. I read in a reputable newspaper a statement to this effect -
Sydney, Monday. - Giving evidence before the Tariff Board to-day, Mr. Charles Reid, of the Sydney Bedstead Works, said that people were now buying cheaper bedsteads, so that their money could go towards such luxuries as motor cars. He complained that the Federal Capital Commission, which recently purchased 100 stretchers from the United States of America, at 21s., had turned down his tender for a better article at 17s. 6d. each.
As that evidence was given by Mr. Reid on oath, and if intentionally incorrect, would subject that gentleman to a penalty, I considered that I was presenting a statement which should be correct, and that it was unnecessary for me to verify the information. The statement contains a direct charge against the Federal Capital Commission, and, in the circumstances, I felt justified in asking that the Commission should be requested to confirm or refute it.
– On a personal explanation, I assure the honorable member for Adelaide (Mr. Yates) that I had no desire to rebuke him. What was in my mind was that possibly for the moment he had forgotten the authority which the public attaches to a statement made by a member of Parliament. The statement whichhe made merely as a quotation from some other authority appeared to bear his endorsement. I am perfectly sure that the honorable gentleman did not intend that. I assure him that the matter will be brought under the notice of the Federal Capital Commission, and I am certain that it will be satisfactorily explained.
– Has the Minister for Home and Territories received any information respecting the supply of oil from the bore at Roma?
– The information that we have received is exactly similar to that which appeared in the press this morning. I have nothing later.
– Prior to the recent New South Wales elections, the Prime Minister made a public appeal to the electors of that State, in the course of which he said that their choice was between constitutional government and government by certain disruptive forces in the community. Seeing that nearly 500,000 people appear to stand for the adoption of the revolutionary methods to which he referred, does he propose to make use of the organized forces of the Commonwealth to suppress them?
– Owing to the confusion which always occurs in a political campaign, I am afraid that the 500,000 voters mentioned by the honorable member did not quite appreciate the point which I was seeking to make.
– Some time ago the Prime Minister, in reply to a question which I asked him, stated that he had communicated with the High Commissioner in London respecting certain speeches which that gentleman hadmade on controversial subjects. Has a reply to that communication been received?
– I have received a cablegram from the High Commissioner, in which he stated that he was quite unconscious of having discussed any controversial subjects in his public utterances. He added that if he had done so, he deeply regretted it, and would take care, in the future, to keep well clear of such topics.
asked the Minister representing the Minister for Defence, upon notice -
Department Aviation, Civil Aviation, Construction of Planes, Scientific Investigation (Air), Training Schools (Air), Aviation Clubs, Aviation Press, Ground Organization, or for any other purposes in connexion with flying operations ?
What arc the figures for each year from 1921 to 1927 for the R.A.A.F. and Civil Aviation Companies, regarding -
– The information is being obtained and the honorable member will be informed as soon as possible.
asked the Minister . for
Trade and Customs, upon notice -
– The replies to the honorable member’s questions are as follow : -
asked the Treasurer, upon notice -
– The replies to the honorable member’s questions are as follow : -
asked the Prime Minister, upon notice -
In view of the inconvenience caused to honorable members and others interested by the delay in making available printed copies of important reports and other documents tabled in the House, can the procedure be altered to provide that such printed reports and documents be made available at the same time as they are tabled?
– Inquiries are being made with a view to this request being complied with as far as possible.
asked the Minister for Trade and Customs, upon notice -
Will he supply the House with a return showing -
The number and value of rabbits exported annually from 1922 to 1927?
The number and value consumed in Australia for the same period?
The number and value of rabbit skins exported from Australia annually from 1922 to 1927?
The number and value used in Aus tralia for the same periods?
– The information is being obtained as far as possible.
Chargesin “ Labour Daily
asked the Minister representing the Minister for Defence, upon notice -
Whether the following charges, appearing in the Labor Daily of 20th, 24th and 26th May, 1927, arc correct: -
Will the Minister institute immediate inquiries, if he has not already done so, and present a comprehensive report on these questions?
– The replies to the honorable member’s questions are as follow : -
Weirat Yarralumla- Governor-Gene- ral’s Residence - Accommodation for Telephone Mechanics - Child Endowment: Government Printing Employees.
asked the Prime Minister, upon notice -
Will he take steps to provide a weir at Yarralumla, on the Molonglo, in order to provide facilities for boating, fishing, aquatic sports, and beautification of the Federal Capital City?
– A proposal for the provision of a weir on the Molonglo River at Yarralumla, in order to improve that stream in the city area and, incidentally, to provide for the facilities mentioned, was referred last year to the Parliamentary Standing Committee on Public Works. That body submitted a report on the 2nd June, 1926, indicating that, in its opinion, the construction of the Molonglo Dam was not immediately necessary, and should be postponed. As a result of this report, the proposal was not proceeded with. Consideration is being given to the question of re-submitting the scheme to the Public Works Committee for further investigation.
asked the Minister for Home and Territories, upon notice -
What was the total amount expended on the erection and/or reconstruction, furnishing, and fitting of (a) the Governor-General’s residence and (b) the Prime Minister’s residence?
– The information desired by the honorable member is being obtained, and he will be advised when it is available.
– On the 13th October, the honorable member for Dalley (Mr.. Theodore) asked me the following questions, upon notice : -
I then informed him that I was obtaining a report on the matter from the Federal Capital Commission, and would advise him as soon as it was received., I have now received the following information from the commission : -
Not at present. The whole of the accommodation available in the commission’s boarding establishments is fully taxed to meet the requirements of transferred public servants and of officers already in the Territory. Itis hoped that the position in this regard will be improved soon by two means : -
The complaints made by these officers have already been investigated both by senior postal officials and by officers of the commission, and it is considered that there is no serious causa for complaint. Owing to the conditions controlling the appointment of officers in the PostmasterGeneral’s Department, it was impossible to ascertain until almost the lastminute exactly what officers would be transferred to Canberra, and what accommodation they required. The whole position in connexion with the housing of Postmaster-General officials during sessional periods and during the rest of the year is being made the subject ofa social investigation.
– On the 14th October, the honorable member for Yarra (Mr. Scullin) asked the following question, upon notice -
Will he give favorable consideration to the question of paying child endowment to employees of the Government Printing Office in Canberra, which is now under Commonwealth control, as is done in the case of temporary and permanent Commonwealth employees ?
I am now in a position to furnish him with the following reply: -
The employees referred to are paid rates the basis of which is the relative industrial awards. It is not the practice of the Commonwealth Government to grant child endowment in such cases, as the wage fixed by outside industrial tribunals covers dependent children.
– On the 14th instant the honorable member for Reid (Mr. Coleman) asked me the following question, upon notice -
What is the percentage increase in building costs for an average four-roomed war service dwelling since 1921-22?
I am now in a position to give the following reply : -
As the size of a house varies considerably, a reliable comparison cannot be made. . The best basis is per 100 square feet of floor area, and in 1921-22 the average cost thereof was £66, whilst to-day it is £77. These costs apply to brick construction in the Sydney metropolitan area only.
Cost of Proposed Works
– On the 12th October, the honorable member for Swan (Mr. Gregory) asked the following question : -
In view of the appalling discrepancy between the original estimate of £4,660,000 and the later estimate of £14,000,000 for the Murray river works, will the Minister for Works and Railways (Mr. Hill) supply a full report, including a detailed statement, showing the estimated cost of each original proposed work; the present estimated cost of such works, and the estimated cost of proposed works not in the original approved scheme; or, as the case maybe, the class and cost of additions to the original proposals?
I replied to the effect that I would go into the matter to see how far I could make the information available.
In. the agreement of 1914 the costs of the works set out therein were estimated as follows: -
The cost of the works completed to date are as follow : -
The following are the revised estimates of cost of works at present in hand or about to beput in hand : -
The question of these increased costs has, from time to time, been brought under the notice of the four contracting Governments by the River Murray Commission, and has also been referred to in the quarterly Schedule of Works under the control of the Department of Works and Railways issued to honorable members. The following is an extract from the report of the River Murray Commission for the year 1926-27, which was recently laid on the table of the House : -
It will therefore be seen that in some instances the costs of individual works have been trebled. We deem it advisable, as the authority in general control, to officially point out to the Governments concerned these increases in costs over those contemplated when the River Murray Agreement was entered into by the four contracting Governments. The causes which have mainly contributed to the increases referred to are those which have affected works of every character since the war. viz., the enormous advances in costs of materials and in rates of wages, which have rendered valueless estimates of costs based on conditions existing prior to 1914. In addition, it may be pointed out that the estimates appearing in the River Murray Agreement were based on very meagre information regarding the nature of foundations upon which the works are being constructed, and river conditions generally.
If the honorable member is desirous of procuring further information regarding individual works, I shall be pleased to arrange for him to peruse the detailed estimates in relation thereto. I have to add that no additions have been made to the scheme as set out in the River Murray Agreement, with the exception that the Hume reservoir is now being constructed to provide for a capacity of 2.000,000 acre feet in lieu of 1,100,000 acre feet, as originally proposed.
– On 7th October, the honorable member for Cook (Mr. C. Riley) asked me the following questions: -
I am now in a position to furnish th<> information -
– On the 14th October, the honorable member for Batman (Mr. Brennan) asked the following question, upon notice -
What is the average estimated cost to the Commonwealth per head of immigrants, up to date of landing, under the existing immigration agreement with the British Government, and what is the average amount per immigrant which has been refunded to the Commonwealth?
I am now in a position to furnish the information -
Revenue and Expenditure
– On 13th October the honorable member for Newcastle (Mr. Watkins) asked the following questions, upon notice -
The replies to the honorable member’s questions are as follow : - .
The amounts given as expenditure in reaped of Hamilton and the offices mentioned in (3) do not include anything for administration, interest, depreciation, upkeep of telephoneassets, carriage of mails, maintenance of other assets, equipment, sanitation, water supply, superannuation, and other like charges.
– On the 13th October the honorable member for Hunter (Mr. Charlton) asked the following question, upon notice -
How many rounds of ammunition have been issued free to rifle clubs by the ‘Defence authorities in Brisbane since 1st July last?
I am now able to inform the honorable member that 756,678 rounds have been issued free to rifle clubs in Queensland since 1st July last.
– I have placed on the table of the Library for the information of honorable members notes and graphs relating to the variability of the rainfall of Australia.
Assent to the following bills re ported : -
Appropriation (Works and Buildings) Bill 1027-28.
Loan Bill (No. 2) 1927.
Bill received from the Senate, and, on motion by Mr. Marr, read a first time.
The following paper was presented: - Scat of Government (Administration) Act - Notice of intention to vary the plan of layout of the City of Canberra and its environs, dated loth September, 1927.
Debate resumed from 14th October (vide page592), on motion by Dr. Earlepage -
That the bill be now read a second time.
– Since Friday last I have had an opportunity to perusesome of the speeches delivered in opposition to the bill. It would appear, from the general tone of the remarks of honorable members oppo site, that they fear that the measure will have an injurious effect on the Commonwealth Bank. Indeed, some honorable members’ speeches seem to indicate that the bill has been designedly framed to bring about the downfall of that institution. It is hard to accept such a contention. The bill which authorized the foundation of a Commonwealth Bank was introduced by a Labour Government, but the institution itself for practically the whole of its existence has been under the control of Liberal and National Governments. Mr. Hughes, who was leader of the National Government during the period of the Avar, which broke out not long after the establishment of the bank, was personally opposed to its foundation.
Mr.Charlton. - I do not think that that is correct.
– I accept Mr. King O’Malley’s statement contained in a small book published by him, that Mr. Hughes was personally opposed to the idea of establishing a Commonwealth Bank, but that he accepted it as part of the policy of the Labour party. I have no doubt he found it a very useful institution during the disastrous years of war. Not only did the bank prove beneficial to Australia during that period; the war itself proved beneficial to the bank inasmuch as it helped to put it on a solid foundation. The Hughes Government was succeeded by the present Bruce-Page Government, which has found it necessary from time to time to amend the Commonwealth Bank Act. But whenever the Government has sought to amend the act,it has been met with the cry “ If you tamper with the position of the bank you will injure it and help to bring about its downfall.” One of the changes made has been to institute a board of directors in addition to the governor. It was a very wise precaution to take, and in this respect the Commonwealth Government has followed the example of those responsible for the constiution of the Bank of England. The charter of the Bank of England has been altered several times. One alteration provided for the appointment of a deputy governor with a board of directors numbering 24. No personcan fill the position of governor of the Bank of England until he has served in the capacity of deputy governor for two years. Another alteration has been to separate the note issue portion of the business of the bank from the general banking operations. “When a similar change was made in Australia opposition was raised, and it was said that this step also would prove injurious to the Bank. On the contrary, since the change has been made, the Bank has made headway. Again, when the Ruml Credits branch of the Commonwealth Bank’s activities was set up, it was said that it would prove injurious to the Bank; but the Bank has since continued to make headway, A Labour Government may have founded the Bank, but it has progressed under the control of other governments till it has reached the leading position is now occupies in Australia, lt has very little to fear from the present Government and its Treasurer. I cannot understand the desire of honorable members opposite to revert to the system of having a single governor of the Bank. One great objection to that system is that when a governor grows old, and either retires or dies, it is exceedingly difficult to fill the vacancy; it is purely a gamble whether we get a first-class man or a failure. The more trained men we have available in such an emergency the better it will be for all concerned The present Government h’as appointed a board of directors, and the value of the services of men with -private business experience is reflected in the success of the bank to-day. It would be too risky to place control in the hands of too small a board. Although many private business establishments are conducted under one roof it is often found desirable to separate various departments, and it stands to reason that the savings bank department could be carried on more successfully under separate management than under the control of the board of the general bank. “We have the assurance of the Treasurer that the Government has consulted the authorities at present controlling the institution, and I also understand that the opinion of a recent visitor from abroad, a most eminent banking expert, was obtained regarding the proposed change. So far as I can see, there is no danger ‘of the rural cml its department being abolished.
Nobody desires to revert to control of the Commonwealth Bank by a single governor, although it is generally recognized that Australia was fortunate in having the services, during the bank’s early years, of such a capable financier as the late Sir Denison Miller. I do not propose to discuss in detail the technical reasons why the alterations for which the bill provides are necessary. I am satisfied that the Government lias the welfare of the bank at heart, and I am quite prepared to adopt its proposal, lt has been said that the agreements made with Queensland and Tasmania have been overlooked; but it seems to me that proper provision is made (or those States. The bill is more or less of a machinery character, to enable the” housing scheme outlined by the Prime Minister to be put into effect. Although the criticism has been heard that no indication of the measure was given when the Government’s policy was announced, I find from the Prime’ Minister’s speech that he foreshadowed an amendment of the Commonwealth. Bank Act in order to give effect to the housing scheme. I am disappointed to notice opposition to the bill from the Ministerial side of the chamber. Now that the Prime Minister and the Treasurer have submitted a measure promised on the hustings, Government supporters should be prepared to accept it.
Since you, Mr. Speaker, have ruled that the housing policy may be discussed generally, I shall direct portion of my remarks to that subject. When Lord Salisbury was Prime ‘Minister of England be said -
I feel that the condition of the lowest and poorest of the working classes in the most crowded parts of the community is one which, more than any other, deserves attention both outside and in both Houses of Parliament, because it is by the character of the English race, and the nature of those produced from generation to generation, that you carry on the traditions of the country, fill its armies, perform its public services, maintain its prosperity, and uphold its ancient reputation; and their fitness for this must depend upon the physical causes which attend their birth and nurture. Among these physical causes none is more powerful, or more prominent, than the condition of the houses’ in which they and their parents dwell, and, therefore, there is none that deserves more earnest, careful, unflagging, and yet circumspect attention, both of the philanthropist and the statesman.
It has been stated that only 52 per cent, of the people of Australia own the houses in which they live, or are making payments towards- their purchase. That is a low percentage for a country as prosperous as Australia is supposed to be. If more houses were provided, and better facilities given for their purchase by the occupants, some of the evils that we fear would quickly vanish. In South Australia I took an opportunity of inspecting the cottages erected there under the
Labour party’s “ Thousand Homes “ scheme. The occupants, in the main, were originally good supporters of the Labour .party; but, when the elections ensued, many of them voted for the Nationalist party. At a subsequent election, it was discovered that by far the greater proportion of the new owners voted against the party that was responsible for the erection of the homes. The lesson to be derived from that result is that, once a man secures a home of his own, he forms high ideals of citizenship. It seems to me that those honorable members who oppose the bill believe that, if it can- ‘be defeated, there will be an end to the housing scheme. Prior to the war, houses were being built in New South Wales at the rate of one to every increase of three in population. Owing to the financial burdens due to the war, one house was built for an increase of six in the population. Now New South Wales has returned to the pre-war position; but that is not sufficient to ensure progress. In a year or two, instead of 52 per cent, of the’ people owning the houses in which they live, the number of owners will have been considerably reduced unless we seriously grapple with the problem. In 1911-12 we were erecting in New South Wales one house for every two and a half increase of our population. The position now is such that it is highly desirable that the Federal Government should come to the assistance of the States. The Treasurer pointed out in his budget speech that since the war 1,000,000 homes have been erected in. Great Britain. Apparently, the Government qf the Mother Country is meeting its obligations in that respect. To illustrate the rising costs of building, I may state that in 1913-14 there were erected in the Sydney metropolitan area 9,7S1 homes, for a total cost of £6,885,000, or an average cost of £704.
– Were those homes erected under government schemes?
– They were the result of the operation of State and other building schemes to meet the needs of Sydney and suburbs. lu 1925-26, 10,653 homes’ were erected for a total cost of £12,234,000, or an average cost of £1.14S. The majority of the State schemes provide for an advance of only £750, and usually the amount allowed for the building and land is under £1,000. The Commonwealth scheme will authorize an advance up to £l,S0O, and since the average cost of a home is now in the neighbourhood of £1,200, there is reason to believe that the more liberal provision will be largely availed of. In 1924 there were no fewer than 693 families each living in a single room in Sydney. The enormous increase in the cost of building, together with the operation of the Fair Rents Court, has retarded building operations in New South Wales. I admit that in some respects the Fair Rents Court has been beneficial to a certain section of the people. Possibly, with the change of government in that State, the law will be amended. It has been suggested by those who have taken a keen interest in the working of building societies and other home-building schemes, that not more than 15 per cent of the total cost should go in the purchase of the land for each home. It is feared that if a larger amount were allowed we should be encouraging land-boom conditions. Critics of the Government scheme have urged that an advance of 90 per cent, will render the scheme unsafe. Our experience with a number of building societies in New South Wales does not support that view. Mr. Theodore, who spoke the other day, had something nice to say about Queensland, which, as honorable members know, has given close attention to this problem, and has built a large number of workers’ homes. The latest figures show that in some instances the advances in that State have been ‘up to 95 per cent, of the total cost.
– On the smaller amounts.
– That is so. Advances’ in that State are not made to workers’ whose income exceeds £260 a year, and the repayments extend over a period of. 25 years. No fewer than 12,690 workers’ homes have been built in the northern State from 1909, when the art came into operation, until 30th June, 1926. As to the security, I take it that the authorities are concerned more with the life and character of an applicant than with the actual margin. It is much safer to advance certain men 95 per cent, of the total cost, than to advance 60 per cent, to others. In cases where only 60 per cent, is advanced the applicant is often confronted with the difficulty of raising a second mortgage, for which he has to pay an exorbitant rate of interest, sometimes as high as 12 per cent. Some friends of mine are anxiously waiting for the Commonwealth scheme. They know that, as they will be able to get an advance of 90 per cent., they will be free of the incubus of a second mortgage. At present many capitalists are giving a great deal of attention to second mortgages as an investment. If this channel were closed to them, as it will be when the Commonwealth Rank scheme is functioning, ‘ the money, which ‘ is at present being invested in second mortgages will be available for other forms of investment. The New South Wales Fair Rents Court. limits the return to an owner of a property to 2-J per cent, above bank interest rate, and since that margin is necessary to keep a building in repair, that form of investment is not by any means attractive to speculators. New South Wales is building nearly the same number of houses that were being erected many years ago, but it is not keeping pace with the normal increase in population. . Under this scheme £20,000,000 is to.be set aside for home-building operations. This will provide for from 16,000 to. 20,000 homes. Undoubtedly, it will ease the situation considerably, especially as the principal sum will be like a chain letter, in that, as repayments come in, they will be liberated for the erection of still more homes for the people. I do not- agree with the contention that the Commonwealth Bank should not participate in these activities. It is not .intended that the bank itself should erect the homes: that work will be left to various institutions already in existence. Country municipalities might well come within the scope of this measure. Outside the metropolitan districts of the several States I know of no municipalities which have undertaken housing schemes ; yet’ In most municipalities there are buildingswhich are a disgrace to them. Thepeople in such towns should be encouraged by the civic authorities to build better homes. During recent years’ portions of the slum areas of Sydney have been resumed with advantage to the community generally. With the population of Australia continually” on the increase, there is scope for the expenditure of large sums of money in providing suitable homes for the- people. I am pleased that the control of the Commonwealth Savings Bank will be removed from political control, and made a separate undertaking in charge of men who will be able to concentrate on its activities. The Government has shown-its concern for the welfare of the workers of this country by providing in this measure that advances up to 90 per cent, of the value of a home may be made. The bill has my support.
.- Before dealing with the provisions of this bill, which proposes to transfer the savings bank branch of the Commonwealth Bank and all its assets to a commission, I desire to express dissatisfaction with the manner in which the measure has been presented to the House. During the whole of my parliamentary experience no more complicated measure has been brought before us for consideration. The Treasurer should either have introduced a bill to amend the Commonwealth Bank Act by excluding therefrom all reference to the savings bank branch, or placed before members a memorandum setting out both the. existing legislation - and the proposed amendments. Probably not six honorable members understand the measure now before us; I doubt whether the Treasurer himself understands it. Clause 8 reads -
Section fifty-two of the Principal Act is. repealed and the following section inserted in its stead: - “ 52. - ( 1. ) The provisions of sections sixteen B to twenty (inclusive), twenty-seven to twenty-nine (inclusive), thirty-one to thirtythree (inclusive), thirty -four a, fifty -three to fifty-eight (inclusive), fifty-nine, sixty, sixty-one and sixty-two of this act shall, so far as applicable, apply in relation to the Savings Bank in like manner as they apply in relation to the bank. “ (2.) In the application of those provisions -
any reference to the board shall be read ass a reference to the commission ;
any reference to the directors shall be read as a reference to the commissioners:
any reference to an appeal board shall be read as a reference to the appeal board of the Savings Bank; and
any reference to officers of the Bank shall be read as a reference to officers of the Savings Bank. “
How can honorable members deal with a measure of that kind? I suggest that after the second reading stage has been passed consideration of the bill should be postponed uutil members have been provided with a memorandum along the lines I have indicated. The honorable member for Eden-Monaro (Mr. Perkins) touched on almost every phase of the bill except its underlying principle. This measure is an attempt to cripple the Commonwealth Bank and to reduce its prestige by taking from it the savings bank branch. That phase of it the honorable member for Eden-Monaro skilfully evaded. Instead of dealing with it he charged the Opposition with desiring to kill the Government’s housing scheme.
– It has no housing scheme.
– It is generally known throughout Australia that the Labour party has been responsible for the legislation by which homes for the people have been provided. It is now too late for the honorable member for Eden-Monaro to attempt to create a different impression. We on this side are not opposed to any proper housing scheme, but we are opposed to any reduction of the status of the Commonwealth Bank. The honorable member’s statement that the right honorable member for North Sydney (Mr. Hughes) was opposed to the establishment of the Commonwealth Bank was news to me.
– I gave my authority for the statement.
– The right honorable gentleman has always supported the Commonwealth Bank.
– Of course I have.
– When the Commonwealth Bank was founded in 1911 the right honorable member for North Sydney was a trusted Minister of the Labour Government then in power. The bank was placed under the control of a Governor, the late Sir Denison Miller: who not only had considerable banking experience, but also the confidence of the people. As evidence that the party to which he belongs has always supported the Commonwealth Bank, the honorable member for Eden-Monaro (Mr. Perkins) said that successive Nationalist Governments had at no time made any attempt to wipe it out of existence. I remind him. that during the life of the late Sir Denison Miller no Government would have dared to lay its hands on the bank. Only after the death of its first Governor was any attempt made to injure the bank. Sir Denison Miller established the bank on a sound footing, although he had very little capital with which to do so. During his lifetime the whole of the bank’s operations were conducted by men inside the bank, but after his death that principle was departed from. In 1924 a board, consisting of men interested in big business in Australia or associated with private banking institutions, was appointed to control the bank. The Labour Party opposed the appointment of that board for the reason that it believed that the bank should be controlled from within, and not by people outside. Control of an institution from within has at least the advantage that those in charge are in sympathy with its aims and will endeavour to make it a success. Men with other financial interests cannot be expected to exercise thesame zeal for the bank’s welfare. Despite our protests, that amending legislation waspassed, and this bill is the first fulfilment of our prophecy that the tendency of the board would be to reduce the status of the bank. We said that the day would come when a vital change in its constitution, would be proposed; that proposal is before us now. A few days ago the Treasurersaid, in reply to an interjection, that the beard had been consulted regarding this scheme to separate the savings bank from the general bank. Surely this House should know if the change was recommended by the board.’ Even if it was so recommended, my view would be unaltered ; but we are at least entitled to know the mind of the board. Is this alteration being made on the advice of the body that was appointed by this Government to control the Commonwealth Bank, or is the board prepared to carry on the savings bank operations? We are entitled to know the view of the Governor of the Bank. The Treasurer should have given that information to the House.
– I said that I would furnish exact information during my speech, in reply.
– The Treasurer should have given the fullest possible information when moving the second reading of the bill. The Government seems to be adopting the practice of keeping back vital information until it has been demanded in debate. When commending n bill of this kind to the House, the Minister in charge should give to honorable members complete information, arid should state particularly on whose recommendation an important change of policy is being effected. The Treasurer’s speech contained no justification of this action. The Labour party established the Commonwealth Bank with the idea that, in addition to becoming a bank of reserve, it should do ordinary banking business in competition with the private banks. Unfortunately, it has not extended as we would have liked. Many big towns throughout Australia are without a branch of the bank, although they desire one. The result is that the bank does not come into competition with private institutions as it should. I believe that its business! would be from 40 to 50 per cent, greater if a less conservative policy had been adopted by the management.
– There is a branch at Wangaratta.
– Wangaratta is lucky; the citizens of many bigger towns are unable to get a branch of the bank established in their midst. Perhaps it is profitable to be a supporter of the Government. It is a recognized fact that the business of the bank has not been pushed in competition with- the private banks. Can we expect a more progressive policy in the future under the scheme that is now before us? The present board of management has been in existence for three years, and now we are asked to amputate one leg of the Commonwealth Bank. More money is deposited in the savings bank than in the general bank, and it is cheap money, for. only 3-J per cent, is paid on deposits which represent mainly the savings of the working-class people. Wealthy citizens do not patronize the bank as one might expect, and their deposits amount to a much smaller sum than the savings of the poor. Consequently, if the savings branch becomes a separate institution a severe blow will be dealt to the Commonwealth Bank, and its profits must be reduced. Is it necessary to create another board to deal with only the savings Branch? The honorable member for Eden-Monaro offered no justification for this measure. He seemed to think that a separate management was necessary, because .the savings bank would provide £20,000,000 for the housing scheme. But the savings bank will not build houses. The actual work will be done by the constructing authorities in the States. They will apply to the savings bank for funds, the money will be handed over to them, and their officials will build the houses’. So far as the savings bank is concerned, the transaction will involve merely a little bookkeeping. Yet, to do that work, a new board is to.be established at considerable additional cost. The time has arrived when, we should call a halt in regard to the creation of boards and commissions. This Government will become known as “ the Ministry for Boards and Commissions.” For years it has done nothing but transfer its responsibilities to outside bodies. Whenever a problem confronts the Government, a committee, board, or commission is appointed to deal with it. Each one of these bodies adds to the cost of administration. When any matter is handed over to one of them, it immediately commences to collect a staff. The Treasurer may say that all the staff which the savings bank may require will be obtained from the Commonwealth Bank.
That may happen, but it is quite probable that other appointments will be made ‘from outside the Service. Every addition to the ‘ cost of administration means a reduction of profits. So, we are justified in demanding that the Government shall show good cause before it appoints a commission to do what is now done by a board of directors and was for a long time done by the governor alone. The only deduction one can draw from this bill is that it is part of a scheme to reduce the status of the Commonwealth Bank. I believe that within a few years, if this Government remains in office, we shall be asked to curtail the general banking business so that the institution will become merely a bank of reserve, and, instead of competing with the private banks, will be used to bolster and assist them. That is the direction in which all this legislation is trending. I have prepared some figures which reveal what the severance of the savings branch will mean to the Commonwealth Bank. The general deposits in the Commonwealth Bank amount to, approximately, £32,277,000. This includes about” £20,000,000 which, being on current account, is free of interest. The remainder may be assumed to be on fixed deposit, and earning 5 per cent., The deposits in the savings bank amount to £46,479,0.00, which is only earning 3$ per cent. Let us assume that this money is re-invested at 6 per cent. Portion of the current accounts will be kept in reserve* so, for the sake of argument, we may estimate that £15,000000 is reinvested at 6 per cent. This will yield a profit of £9.00,000-. The remaining £12,000000 would yield, a profit of only 1 per ‘cent., because the bank pays 5 per cent for it; that would represent an annual profit of £120000. On the deposits, therefore, . the approximate profit annually would be about £1,020000. The savings bank balance of, roughly £46,0.00)000 would yield a profit of 2£ per cent., or £1,150,000. It will be seen, therefore, that the segregation of the savings bank branch means the taking away of the most important part of the bank’s deposits. As the savings branch is earning the. greater revenue; it is not fair to propose to-separate it from- the- parent in- stitution and place it under a separate management. The honorable member for Wannon (Mr. Rodgers) said that the savings bran,ch is not to be entirely separated from the other, and the Treasurer acquiesced in that statement, but anyone who consults the bill must come to the conclusion that a new institution is to be established. The honorable member for Wannon quoted proposed new section 35aa in support ‘Of his statement that the savings branch would co-operate with the Commonwealth Bank, but there is nothing in the bill to justify that argument. I have read the measure, carefully line by line, in conjunction with the original act, and it is clear to me that the savings business is t to be divorced from the general bank, and that a new institution is to be created under a separate management and at great cost. The Commonwealth Bank should be the financial Gibraltar of Australia. Did it not during the war realize the fullest expectations of its founders? Did it not render great service to the country and save us millions of pounds ? Honor.orable members have said that the bank was not interfered with during the war. The Government could, not afford to interfere with it then; but soon after the war ended, the bank was placed under the control of men chosen largely fromprivate banking and commercial institutions. This bill is another stage in the process of undermining it. What must be the effect upon the outside .world ? If twelve months’ hence the assets and profits of the Commonwealth Bank are shown to be less- than they were in former years, the impression will be created abroad that the bank is declining, and is not the sound financial edifice that it was believed to be.. Our aim should be to build up the bank and- make it the financial bulwark of the country, but no one will deny that the tendency of this legislation will be to reduce the: strength and impair the status of the bank. What reason is there for the proposed change? It merely involves the payment of large salaries to a few individuals, and of a large number of moderate salaries to thosewho; will be employed by the numerous new. departments, that must necessarily be created. I understand; that the Trea- surers of Tasmania and Queensland nave not even been consulted. This bill, if it passes successfully through its committee stage, must be given effect without the consent of those chiefly concerned. We have no right to force that position on the States, and to change entirely the prevailing procedure. If the consent of the States has been secured, then it :is the duty of the Treasurer to pass ‘that information on to honorable members.
I shall not go into the housing question. That stands by itself. I consider the statement of the honorable member for Eden-Monaro (Mr. Perkins). to be quite unwarranted. This party has no objection to providing houses for the people, provided the business is conducted on a proper basis. We do object to any interference with the standing of the Commonwealth Bank, and to its disintegration. This bill contains nothing but the machinery to separate the savings bank branch from the general branch of the Commonwealth Bank, and it is the intention of this party to oppose the bill at every stage. Honorable members who have studied the question, such as the honorable member for Fawkner (Mr. Maxwell), admit that it is unnecessary to bring about this separation, that it will merely impose additional expenditure on the coun try at a time when that can be ill afforded. Our expenditure has grown by leaps. and bounds, and at a faster rate since this Government came into power than previously. That is largely due to the creation of a conglomeration of small and unnecessary departments. If ever a unnecessary commission was proposed, it is this commission. It is the duty of every honorable member seriously to consider the measure. I am glad that several honorable members opposite have already signified their intention to vote against the second reading. If honorable members believe that the Commonwealth Bank, under its existing constitution, is able to handle the housing question satisfactorily, they should register their votes against ‘ the bill, and so prevent the country from being loaded with additional and unnecessary expense.
– The Government proposes, under cover of a housing scheme, to dismember the Commonwealth Bank and to disturb an equilibrium, that,, despite a previous attempt by the Treasurer to improve the bank, has existed for many years. I heard with absolute amazement the legend related this afternoon by the honorable member for Eden-Monaro (Mr. Perkins), and recall that last week another honorable member told much the same story, although perhaps not with such wealth of detail. The history of the Commonwealth Bank is this : Before the first Federal Parliament was elected, an interstate Labour Conference, sitting at Sydney, placed as a plank in its platform the establishment of a national bank. That was many years before I met my dear old friend, the Hon. King O’Malley. Undoubtedly whatever credit or discredit attaches to the establishment of the Commonwealth Bank belongs to the Labour party, and to none other. The honorable member for EdenMonaro made the monstrous assertion that I had opposed the establishment of this bank. Honorable members opposite know that to be quite untrue. In justice to two gentlemen, one of whom is dead and the other sorely stricken. I feel impelled to declare that Hae credit for the establishment of the Commonwealth Bank in the form in which it exists is due entirely to the late Sir Denison Miller and to the Right Honorable Andrew Fisher. Whether the bank in the form in which it was constituted is to be regarded as ideal or falling far short of perfection, one thing is certain: if credit for it belongs to a man rather than to a party, that man is Andrew Fisher. To Sir Denison Miller must be given credit for the development of the bank and the triumphant realization of what, according to the current belief in influential quarters, was the dream of mad visionaries. When he was called to its management it was nothing, and he gave it shape and substance and breathed into it the spirit of life. By his indefatigable effort, his clear vision, his wide experience, he built up a mighty institution which compares favorably with private banks that have been established for a century and more, and now stands as a monument to his memory. The bank is also a proof - the wisdom of those - among whom I may be counted - who supported the project, and were responsible for placing the Commonwealth Bank Aci upon the statute-book. Nothing has pleased me more than the manner *in which the bank lias gone about its business, eschewing’ all political considerations. No one can say that those in charge of it have for one moment turned aside, and listened to the promptings of this or that Government. The bank has always endeavoured to curry on the business for which it was established, and, prior to the advent of the. present, Treasurer, was allowed to follow that policy. At our last sitting I referred to the Federal Capital Commissioners as splendid nien, and said that they could discharge their duties satisfactorily only if left alone. If without interference they or others similarly situated fail in their task, they should make way for others. This has been the attitude of . all previous governments towards the Commonwealth Brink. But the present Treasurer is obsessed with a desire to constantly meddle with and change everything. His conduct in regard to the bank resembles that of a man who, having obtained possession of a goodly mansion, containing splendid furniture, pictures, aud. statuary admirably arranged, and expressing the spirit and ideals of the previous owner, shifts the chairs, alters the position of the pictures, turns the statuary upside down, and then exclaims, “ See what I have done!” He caine into possession of a mansion magnificently furnished with gold and precious jewels, and ungrateful to vagrant but kindly fate he has given loose rein to his bent for meddling, and upsets and disturbs the harmony and the stability of everything.
From being no bigger than a man’s hand the Commonwealth Bank has grown to be a mighty institution. The
Avar came, and if any should thank God for the existence of the bank, it is those connected with our great primary producing industries. By whom and in what way were the pools, which saved them from black disaster, financed f Every one knows that had it not been for the Commonwealth Bank the pools could not have been establisited and maintained. I do not desire to say a word by way of criticism of the splendidly managed private banking institutions; but had the Commonwealth Bank not led the way, there would have been no followers. The bank was necessary to finance the wheat and wool of Australia. Again and again the primary industries of this country looked to it for support which was not withheld. That was before the rural credits branch was created; since when it has only continued to do what for years the bank had been doing unostentatiously and efficiently.
I ask the Treasurer how many hundreds or thousands of pounds were made available for the financing of our wool and wheat by the rural credits scheme, which but for that scheme would not have been at the service of nien on the land? For the work it has done the Commonwealth Bank deserves great praise; it has a record of splendid achievement. The honorable Treasurer will not leave it alone and allow the men who know how to manage it. But it is now an institution of such substance that no effort of the honorable gentleman or of any one else can undermine its greatness and topple it down. It has its roots in the affection and interests of the people. I warn the honorable gentleman, and every one else, to keep their hands off the bank. When this National party was formed,, the pact was made that the bank and similar institutions which had proved their value, should be left alone. Now I demand my pound of flesh, and nsk that the bank be left alone. Let the Government honour the agreement. The bank has long passed from the realms of party politics, and has become a national institution. It has justified itself. It is a monument of stability, a great national institution. The only doubt now in our minds is whether it will be allowed to continue. People feel the preliminary tremor that may indicate the coming earthquake. What is the basis of the financial success of the bank? The Commonwealth. Bank, like all other banks, rests on the confidence of the people, engendered by its stability, and nourished by the continuity of unhampered control. The Treasurer was responsible for the appointment of a board of directors, and I nsk him what precisely has this board done that could not have been done at least as well by the governor of the bank? I know the members of the board. They are men of high reputation and splendid capacity; but they are not bankers. Unless banking is what some people seem to think politics might be. something of which any fool can make a success, 1 ask how is the business of the Commonwealth Bank to be increased by the appointment of gentlemen who have no special knowledge of banking? I ask the honorable gentleman and the people of this country to contrast what the bank did before the appointment, of these directors with which it has done since. Contrast the tremendous avalanche of responsibility that it shouldered during the war, when it was under the cor.trol of one man, with what it has since achieved. I venture to say that never from the day the bank was established until I left omeo was there any attempt to interfere with Sir Denison Miller. I can speak for Mr. Fisher, for myself, and for Sir Joseph Cook during the interval between two Labour Administrations in 1913-14. The Treasurer is consumed with a passion for altering things. The splendour of this great institution could not have escaped his perception. But he could not be content to leave it in the hands of those who have made it, what it is. Like a small boy who has surreptitiously obtained a pot of paint, and goes about daubing splendid panels, the work of great artists, with the crude barbarities of his infantile art, he has been consumed with a passion for rearranging, disturbing, and unsettling this great, bank. I confess I am angry about this, because the Commonwealth Bank is one of the pillars on which the Commonwealth rests. Its establishment was indeed at one time a party measure, but that day has long since gone, and now, like the White Australia policy, it is a national institution. We should never have heard of the measure now under discussion, this- proposal to improve the Commonwealth Bank by cutting it in half, if there had not been a desire on the part of the Government” to give effect to its housing scheme. I -shall say a word on that scheme later on, but for the present let me ask : In what way is this bill necessary to assist the housing scheme? How does it simplify procedure, or make more money available for this very urgent need of the people? It does not make it easier for the people to obtain money. ‘ It does not add to the fund from which they are to draw. Nor does it appear to me that what is proposed is a straightforward way of doing business. I know that the Treasurer means well ; I do not accuse him of any ill intent. But the most appalling feature about this business is that the honorable gentleman means well, and yet does these things. It cannot be denied that the bank as now constituted, or with a very slight amendment of its constitution, could do what is needed. The Governor has a board of directors to assist him. What does this board do? How often does it meet, and what happens at its meetings? It cannot be contended for one moment that this board could not accept responsibility for the proposed additional– duties. Surely they cannot be regarded as onerous! What are the commissioners to do that the governor and directors and the advisory board could not do at least as well? Thisis a bill to dismember the Commonwealth Bank, by creating a board of commissioners who would be entrusted with the savings bank business of the bank, lt cannot be said for one moment that the business of deciding whether the application of this or that authority for a loan should be approved is a matter to be decided by this board. The lending of money is purely a banker’s business. It is absurd to suggest that the Governor of the bank could not do what is required. If it were proposed to create a housing scheme under which the Commonwealth would actually take upon itself the responsibility and exercise the functions of a glorified building society, there might be something in the contention of the honorable gentleman. But nothing so elaborate is contemplated. The Commonwealth Savings Bank is to find the money and the authorities are to use it. I am not opposed to the proposal that what should be done is only to lend money to authorities, who will employ it in building homes for the ‘ people; though it has been pointed out by the honorable member for Dalley that the only authorities at present in existence who “will benefit are the State Go- vernments or administrators of terri- tories. For. all practical purposes those are the only authorities to whom money will be advanced. Surely it is not necessary to mutilate the bank to attain an end so simple and so slight. The onus is on the Treasurer to show that what he proposes is the only way in which this thing can be done. He has got to show that his scheme is good, that it cannot be carried out except by this means, and that in the doing of it, a serious blowwill not be dealt to the bank itself. Surely it will not be contended that to withdraw £46,000,000 from an institution will leave it exactly as it was. That is not the way to help the bank.
Now I come to the housing scheme. I agree with the honorable gentleman for Eden-M.ona.ro that the Government is now seeking to give effect to the policy announced before the election, and I have no doubt that he was quite right in saying that the housing policy won for the Government a considerable number of votes. But what housing is proposed? Is the scheme a definite one ; has it relation to the building of castles in the air, or does it provide for the construction of houses on the firm earth? We have always boasted that the people of this country are better housed, better fed, and better clothed than any others in the world, and we have boasted too that a larger proportion df our people own their own houses than in any other country. But we have admitted that there is something yet to be done. There are people looking for houses, by whom houses are not to be obtained. There is no more effective counter to bolshevism or any other form of extremism than the contentment and security that the possession of a home gives, and if all our legislation for the masses were placed in one scale and the possession of comfortable homes for the mass of the people in the other, good homes would outweigh them all and tip the beam. The Government announced its housing policy in 1925. There were then not enough houses for the people. During the interval the excess of arrivals over departures has amounted to something like 45,000 per annum. Let us suppose that if there are 80,000 more people here now than were here when the Government went before the country. Then the natural increase has amounted to S0,000 per annum more or less. Assuming that five persons live - in a house, 50,000 more homes are needed now than when the Government announced ‘ its housing policy. I ask my friends on the Treasury bench to say how many houses have been erected. It is of no use to make this belated attempt to put into effect a great policy unless we fulfil the promise to the people in regard to this vital and urgent matter. The Government was returned to Parliament on the crest of a wave. There was terror in the hearts of the people lest wild extremists might overthrow the Commonwealth. A demand for stable government dwarfed all other issues. Stable government rests on the contentment and happiness of the people and the contentment and happiness of the people rest on the possession of good homes. Where are these homes. The British Government has a record of 1,000,000 homes to its credit. That is what the British Government has done, lethargic and’ slow to move though it is’ said to be. But we, who boast of initiative, of enterprise, of progress, we, the runners, from whose shoulders sprout the wings of eagles, what have we done ? How many houses have we built? Now that the race is two-thirds run, and the bell about to ring for the last lap, we rush on to the course, tying our sashes, and stand tiptoe at the barrier, waiting for the signal to start. But before we reach the post the course will be cleared and the gates closed. This belated enthusiasm for housing the people, by nien who have allowed two years to pass with nothing done, does not appeal to me. I have my own responsibility to the people who elected me to this Parliament. Those’ people need houses badly. I am prepared to vote for the Government’s housing scheme, but I am not prepared to vote for this measure. I maintain, and shall do so on every platform in the Commonwealth if need be, that there is no need for this bill. It contains a. sinister suggestion which, taken in conjunction with what has already been done,. should give us pause and make us think. “What is the real function of the Commonwealth Bank? Is it to be merely a clearing bank for the other banks?’ Is it to do no general banking business at all? We have seen the beginning of this business, and now I think we can see the end. We are able at last to peer through the veil of the Treasurer’s words, and the end that I see does not please me. I refuse to take even one step further towards it. I shall vote against this bill, although I intend to vote for the housing bill.
.- The right honorable member for North Sydney (Mr. Hughes) has asked certain questions about the future of the Commonwealth Bank. I should like some information respecting the intentions of the board of directors of the bank. Is it their purpose to operate the bank purely in the interest of the private financial institutions of this country? We have been told that this bill has been introduced in fulfilment of a promise made by the Prime Minister in his policy speech at Dandenong. I consider that it has been introduced mainly to enable the Government to drive another nail into the coffin of the Commonwealth Bank. I have no intention of quibbling over words in discussing this subject. The Government is deliberately destroying the power of the Commonwealth Bank to assist the general community, and is making it merely an instrument to serve the purposes of the private banking institutions in Australia. The board of directors of the bank, doubtless with the approval of the Government, invited Sir Ernest Harvey to visit Australia, to report upon the operations of the bank. That gentleman is practically the controller of the Bank of England, which is the largest private financial institution in the world. After his arrival in Australia, he was entertained by the Millions Club in Sydney, and he informed that august body, according to a report in a newspaper, that upon his return to Great Britain he would do everything within his power to assist the Commonwealth Bank. His exact words were -
As a result of the knowledge I have obtained here, when the Commonwealth Bank wants help in London, it can rely on me.
A little later, in the same address, he observed -
The bank had been established for a very definite purpose, as to the wisdom of whichhe was doubtful.
Sir Ernest Harvey saw fit to doubt the wisdom of the Labour Government in setting up the Commonwealth Bank on thefoundation upon which it stood until the advent of this Government. He went on to say -
He was convinced that the body of men whoare controlling the destiny of that institution arc now taking a very similar view of their work to that of the directors of the Bank of England.
The Bank of England has been mentioned frequently in the course of this debate. It, like the Bank of France and the Bank of America, is a private financial institution which works on national pre1judices, and seeks to gull the uninitiated who think that it stands for the English people and the English nation. The fact is that it is a private institution which is operated for private gain. The Treasurer found that he could not prevail upon the late Sir Denison Miller, when he was the governor of the Commonwealth Bank, to adopt the practices which were followed by the Bank of England, so when the opportunity presented itself he introduced a system of managing the institution by a board of directors. That board has converted the bank into a bankers’ bank. To-day it deals almost solely with private banking institutions, and for that reason Sir Ernest Harvey is willing to do everything within his power to build it up. In his second-reading speech on this bill the Treasurer said -
During its tenure of office, the present Commonwealth Government has continually endeavoured to improve the machinery of the Commonwealth Bank, to enable it to function to the fullest possible extent in supplying the evident needs of the people.
A little later in the same speech he said -
It will be realized that the functions of a central bank are to act as a bank of reserve, to stand behind the other financial institutions of the country, and to prevent panic.
The honorable member for Eden-Monaro (Mr. Perkins) let the cat out of the bag this afternoon when he told us that the object of the Government and its supporters was to make the Commonwealth Bank a replica of the Bank of England. The Bank of England is a bankers’ bank.
It was established when William of Orange came to the Throne of England on the distinct understanding that England would stand behind him in his wars in the Netherlands. At that time the Bank of England was established on the advice of a man named Paterson and certain other business men and merchants who controlled the finances of the country. It was born in a time of war, and ever since then it has lived on wars. It, together with the private banking institutions, and the national debt, form au unholy trinity which is a curse to the nation. The Bank of England has the sole- right to issue notes. At the time that it was clothed with that power nothing was said about the issuing of cheques, and small jointstock banks grew up all over England. By using the cheque system they built up an expanded credit which was supposed to be based on the currency of the country. Most of these small banks were more interested in making profits than in. trading within a safe margin. In common language, they gambled upon the credit of the country. It naturally happened that many of them failed.. With each failure there was something in the nature of a financial panic throughout the country. The mere suggestion that a bank was in ‘difficulties upset the faith of the people in the institution, and caused them to rush to it to withdraw their deposits. In nearly every case the reserve funds of the bank were insufficient to meet such a run upon it, and disaster followed. The Bank of England was used to correct this state of affairs. Its main purpose was, and is, to assist the bankers to carry on their business. As every one knows, immediately the people, lose faith in a banking institution it must fail. The object of the Bank of England is to maintain the faith of the people in the private banks. It was in this way that the business of the bank came to be divided into the two sections which have been mentioned. It has the trading and reserve sides of its activities, but when- everything has been said in its favour, it remains neither more nor less than a bank for private bankers. It was conceived by private financiers for their own protection, and not in the interests of the English people. It operates for the benefit of German Jews, .French Jews, and other foreign Jews who lend money. It is to convert the Commonwealth Bank into an institution of that character that the Treasurer is using all his powers. The private banking institutions of New South Wales are to-day lending at 6 per cent, and 7 per cent, interest 17s. of every £1 that is deposited with them, and immediately they get into difficulties they rush to the Commonwealth Bank for short-dated loans at 5 per cent, interest to tide over their periods of stress. The Bank of New South Wales has a private arrangement by which it is able to obtain up to £200,000 at 3 per cent, interest. These facts speak for themselves. I regard the introduction of this bill as almost the final act in the destruction of the bank. So long as the savings bank remained a part* of the Commonwealth Bank, it was possible to resist the efforts of the Government to destroy the institution. I suppose that this bill has been introduced “on the advice of Sir Ernest Harvey, who thinks that by this means the Commonwealth Bank may become more than ever a bankers’ bank. To-day the Commonwealth Bank does not enter into competition with the private banks; it simply stands behind them.
As for the Government housing scheme, I regard it as quite unsatisfactory. I wish to see the Government itself building houses. With the financial resources of Australia behind it, and with the Commonwealth Bank’s funds at its disposal, it could do far more than any State Government to cope- with and solve our housing problem. The best that the States have been able to do, so far, is to make advances for house construction to the workers for a period of 35 years, with the result that they are obliged to pay no less than £2,700 for homes costing £1,000. I do not regard this as a scheme to provide homes for the people. It is merely a money lending scheme on the line of the Commonwealth’s scheme for lending money to the States to assist returned soldiers to settle on the land. Many of the private concerns referred to by the Treasurer are simply robbers of the people; though there are certainly some private building organizations that give their clients better terms than the Government provides. The Commonwealth, however, is apparently not willing to set up an organization to do something better than can be done by private individuals. The present Government admits its incompetency to do that. It told the electors that it would build homes for them, but it is simply lending the money to some other body and placing on it the responsibility for the task it promised the electors it would assume. The promise it made to the electors has not been kept. Ministers will go back to the electors and say, “ We have kept our promise; we have provided money for the purpose of building homes,” when, as a matter 6f fact, they have simply provided a few more highly paid offices for their friends. What will be the position of the Treasurer if the States, having their own savings bank schemes, decline the assistance he proposes to give to them? I think the position is clear. I rose simply to protest against the action of the Government in further tinkering with the Commonwealth Bank. No doubt the advice given to the Board of Directors of the Commonwealth Bank by a great banker and a recent visitor to Australia has been passed on to the Government. At any rate, it is significant that one of the first measures the Government has introduced is a bill to interfere once more with the provisions of the Commonwealth Bank Act. Early in its career the Government set out to destroy what Labour intended the Commonwealth Bank to be. We learned from the Treasurer’s Budget speech that one of the greatest bankers in the world has told the people of Australia that, although the efficacy of the Commonwealth Bank to fulfil the purpose for which it was created had been very doubtful, that doubt was removed, now that the institution was controlled by a board of directors on the lines of the Bank of England. That seems to appeal to the honorable member for Eden-Monaro. But the Bank of England is a private bank. It functions solely in the interests of private individuals, and cares not for the good of the country, but only for the profits that may be derived through the expansion of British trade. I am satisfied that the bill the Govern ment has brought down will not assist the expansion of the Commonwealth Bank. It will not lead, as Labour intended, to the opening of branches in every town and hamlet where business may be found. With the full resources of the Commonwealth behind it, we expected the Commonwealth Bank to do in the interests of the nation what the private banks are doing in the interests of their shareholders. We expected it to extend its operations into those areas where private institutions are now hanging like a millstone round the neck of rural producers, and with their overdrafts and high rates of interest strangling the development of the country. . We expected it to come to the assistance of the people by charging half the ordinary rate of interest. Finally, we expected it to control credit and cur.rency in the interests of the people, and not in the interests of a few institutions which I can describe as nothing but glorified pawnbroking establishments, whose only idea is to manufacture fictitious currency and make a profit for their own shareholders. The Commonwealth Bank has not realized Labour’s dream. It was not our intention that it. should function simply for the benefit of private institutions. We hoped that in the days of peace it would do for the peaceful development of Australia what it dared to do in the hard days of war. We hoped that it would prove an example to the world, and would make Australia a better place to live in. We hoped that it would help to solve the great economic problems that had been the greatest obstacle to the proper development of other countries. We hoped to set up something. new in outyoung Commonwealth. But the Bank will never fulfil all of those expectations, or be of proper use to the nation, until it is rid of the shackles placed upon it, and becomes what it was intended by Labour to be. This bill will destroy the finest and most constructive legislation that stands to the credit of the democracy of Australia and the Labour Government that introduced it.
.- I support the bill. The need for a measure of this description has been too long felt. Its provisions will afford assistance to a considerable number of persons in need, and I am surprised that it should be opposed by honorable members who profess to represent the very class ofpeoplethe bill aims to assist. The opposition that came from the same quarter to the bill for the establishment of the Rural Credits branch of the Commonwealth Bank is fresh in our minds.We were warned that the establishment of that branch of the bank’s activities would have a destructive effect on the bank. Our experience has been quite the opposite. During the two years in which the Rural Credits branch of the bank has been- in existence over £8,000,000 has been advanced to needy industries. One of the moat important of the industries that have received assistance is the dairying industry, one of the most sweated in Australia, and the one in most need of help. During the last butter season speculators abroad organized with a view to keeping the price of butter in England at from 130s. to 140s. a hundred pounds. That their efforts failed, to the great advantage of the dairying industry in Australia, was entirely due to the fact that the industry had to help it the finances of the Rural Credits branch of the Commonwealth Bank, and the price of butter rose to . 182s. per hundred pounds. It may be said that private enterprise can do what the Commonwealth Bank can do; but while I have not one word to say in condemnation of private banks, if I were associated with a private institution I should not be inclined to make advances on perishable produce, like butter, held in cold stores, not improving in quality, and accumulating the whole time. The primary industries, of which dairying is one, provide the life-blood of the Commonwealth Bank but they cannot live without assistance, and a national bank could not afford to leave them unassisted. We could not expect private enterprise to do what it is the bounden duty of a national bank to do. Nevertheless the Rural Credits branch of the Commonwealth Bank has been obliged to confine its advances to cooperative institutions and other companies. It does not deal with the individual. Hundreds of thousands of persons are debarred from getting urgently needed financial assistance. I trust that the provisions of the Commonwealth Bank Act will be liberalized, and that assistance will be afforded not only to the artisan who requires a home, but also to the small farmer who is struggling to clear his land, put up fences, and buy machinery. The producer is the backbone of Australia. Of Australia’s exports last year, 96 per cent. represented primary produce, ‘and a large proportion of that 96 per cent. was supplied by the small man, for whom I want assistance. I do not see that there will be any need for the creation of new departments. The main business of the Commonwealth Bank in carrying out the provisions of this bill will be to finance State institutions already in existence at the lowest possible rate of interest. It will be the responsibility of the State institutions to give aid to deserving persons. They are in a better position than the Commonwealth to do so, because they know the local conditions and the needs of the people.
– That was said when we handed money to the States to enable them to settle returned soldiers on the land.
– So far,. the soldiers have received very reasonable support from the Commonwealth, and by the time the Com monwealth has finished with them, they will have received a great deal more.
– Did the Commonwealth Government get a fair return for its money when the States invested it?
– The Commonwealth got a fair return, inasmuch as the soldiers helped to save Australia. They kept for us our freedom. So much arewe indebted to them, that I should be prepared to wipe out their obligationswith regard to the money advanced to them.Constructive criticism of the bill should bewelcomed, because our desire should be to improve the measure in every possibleway. The lamentable drift to the cities goes on apace, largely because of the attractive conditions of city life. In Sydney re- cently I saw a crowd of 40,000 people, among whomwere 100 “bookies,” watching coursing dogs chasing tin hares. This must be . discouraged and life must be made more attractive in the country. I understand that the directors of the Commonwealth Bank favour the proposed separation of the savings bank department, and honorable members should be prepared to bow to the opinion of financial experts. The measure particularly appeals to me, because it will assist the struggling farmers. They are entitled to every consideration, because, while homes for city workers are undoubtedly required., the rural population is equally deserving of assistance in the manner provided in the bill. I entertain no fear as to the future usefulness of the Commonwealth Bank as a people’s bank. I agree with the right honorable member for North Sydney (Mr. Hughes) that it carried enormous national obligations during the war, and performed its functions well;. but we should recognize that, during the. war, it was fortunate in having the hearty co-operation of the associated banks, which also rendered magnificent national service. I sincerely hope that this co-operation will continue. The Commonwealth Bank saved the dairying industry upwards of £3,000,000 last year, when the private financial institutions could not fairly be expected to assist that industry. A bank of a purely national character must necessarily take up, on behalf of the people, investments which , would be risky for private banks to accept. The provisions of the bill are fairly generous. I notice that proposed new section 35d states -
The Savings Bank shall, in addition to any other powers conferred by this act, have power -
to carry on the general business of a Savings Bank;
to acquire and hold land on any tenure ;
to receive money on deposit either for a fixed term or on current account;
) to make advances by way of loan ‘ or otherwise ;
to do anything incidental to any of its powers.
Of those provisions I heartily approve. Proposed new section 35aa covers fairly comprehensively the matters to which I have referred. It provides -
The Savings Bank may invest any moneys held by it -
in any Government security approved by the Treasurer;
in advancing money, in accordance with the Commonwealth Housing Act, 1927, for the purpose of erection of dwelling-houses, and for the discharge of mortgages on dwellinghouses ;
in advancing money for the erection of warehouses or storage facilities intended for the warehousing or storage of primary products:
in debentures issued by the Commonwealth Bankof Australia for the purposes of its rural credits department;
on fixed deposit with the Commonwealth Bank of Australia or any prescribedbank;
Ifthe primary producers are given the assurance of 25 years’ security, as provided in the housingscheme, fresh heart will be taken. The ability to conserve fodder against periodical drought will encourage them in a most practical way, and save from famine thousands of head of stock. The sum of £200,000 is provided on the Estimates for scientific research respecting health matters; but I point out that nothing would assist to a greater extent in making rural life in country towns attractive than the provision of sewerage systems in the larger country towns, where the local rates are not nearly sufficient to enable that work to be done. This would do much more to prevent disease than can be expected from compelling the residents of such towns as Warburton, Healesville, Marysville, and Alexandria, in my electorate, to place fly-wire doors on roadside tea rooms. The fact that so large a sum as £200,000 has been allotted for health research shows that the sewerage of important country towns is urgently required.For health reasons alone the Commonwealth should provide money for the States for the sewering of country towns at½ to 1 per cent. under cost. The States should then hand it over to country local governing bodies at 1 per cent. under cost. That would leave the borough council to provide the balance of the interest over extended terms, which would be about4½ per cent. If this were done many country town authorities would sewer. I shall deal with the general subject of housing when the Housing Bill is before the chamber. The only phase of the matter to which I now direct attention is the proposal to advance upwards of 90 per cent, on mortgage. A mortgage is as risky as the purchase of a secondhand motor car. It is- impossible to tell the exact condition of a secondhand house, and it seems to me that an advance of 50 per cent, of the valuation would be ample; but the responsibility in that matter rests with the State authorities. The bill, on the whole, has my cordial support.
.- The bill may be regarded as an attempt, on the part of the Government, to fulfil a promise made by the Prime Minister (Mr. Bruce) during the last election campaign ;, but I am satisfied that the Ministry has no intention to give effect to it, because ministers are not concerned with the housing conditions of the people. Honorable members- on this side of the House have always advocated that the Commonwealth Bank should be so developed as to control the financial destiny of Australia. When the bank was established by the Fisher Labour Government I did all that I could to ensure that it should function along the lines which I had been advocating for many years. Until there is general agreement as to the true functions of such an institution we shall not achieve the purpose which we had in view when we established it. We believed that, just as the acorn grows to a mighty tree, which spreads its branches in every direction, so would the Commonwealth Bank, as time went on, extend its branches to every town throughout the Commonwealth. At all events that is what the Labour party contemplated when, after the 1910 elections, it came back with a substantial majority, and with a definite mandate to give effect to its financial proposals. Its ultimate aim was to ensure that the credit of Australia should be controlled by the Commonwealth Bank. Australia has set other countries an example in respect of much of its legislation. The Commonwealth Bank may also be regarded as one noteworthy result of our legislative efforts. Last year Sir Ernest Harvey, the comptroller of the Bank of England, paid a visit to Aus-, tralia ostensibly for the purpose of advising . the Commonwealth Bank authorities as to certain phases of central banking. It may be of interest to honorable members to know that lately there has been an agitation in Great Britain for the establishment of a national bank in the Mother Country on the lines, presumably, of the Commonwealth Bank, and there is a belief in some .quarters that his visit to Australia last year had some relation to that movement, and that British financial circles are making preparations to prevent the taxation of wealth. Considerable expenditure is going on in the different States in the erection of banking premises. All the banks - private institutions as well as State savings- banks - are reaching out for business. When I visited Castlemaine, in Victoria, a few years ago, I found there a fine two-storey building, being used as a State Savings Bank. The land on which it was built had, no doubt, been bought at a high price; but the bank was doing very little business. On every hand there is evidence that the Treasurer is doing all that he can to prevent the Commonwealth Bank from functioning as it was intended to function by the Labour party. It is obvious that the Government’s housing proposals have been hastily prepared. Possibly they have been put forward to justify the Ministry in the eyes of its supporters. The Prime Minister, as all honorable members know, is a believer in private enterprise. He is quite entitled to his opinion, just as I am to mine. I believe that it is the duty of every government to improve the housing conditions of its people. If one considers for a moment the political environment of the majority of the Government supporters, he must be forced to the conclusion that the housing scheme is not brought down as a serious proposal. If the lines laid down by the Labour party of 1910 for the development of the Commonwealth Bank had been followed, the financial credit of the Commonwealth would have been handled efficiently by the Commonwealth Bank, and primary producers, as well as the industrial section of the community, would have benefited. Until we realize our responsibility as legislators, I am afraid that there will be little chance of any alteration in the financial policy of the Commonwealth. We cannot always expect prosperous seasons to buttress our credit. Droughts will recur from time to time, so unless we strengthen our financial position by ensuring proper control of our credit - and this may best be done through the Commonwealth Bank - we shall never return to a system of sound finance. Recent high prices for wool and other primary commodities have placed us in a false position. It is to be regretted that those in control of our financial affairs, lacking vision, cannot see the clangers ahead. If the Government were allowed to follow its own course without any voice being raised in dissent, it would not be long before the people would replace it by another government which would act in the best interests of the country. Now, when the country is prosperous, is the time for Ministers to act in a statesmanlike manner. This bill, which is the outcome of political excitement, will not benefit the people of Australia. In almost every country of the world the Commonwealth Bank is held in high esteem, but it would appear that the Government does not desire that state of affairs to continue. There is no need for me to remind, honorable members of the important part played by the Commonwealth Bank during the Great War; suffice it to say that Australia’s position would have been far different had there been no such institution then. The Government has no intention of proceeding with an effective housing scheme. Its desire is to destroy the Commonwealth Bank.’ The Government should not hand over to any body of men the control of the country’s finance. I had hoped that, with Parliament in’ its new home, our legislation would be placed on a higher plane. We should rise above parties and individuals; our first duty should be to conserve the interests of the people as a whole. This measure does not do that. I have no animus against private bankers. I do not blame them for taking advantage of the stupidity of the Government; but the Government which enables them to do so is blameworthy. The credit of Australia should be regarded by the Government as a sacred trust. If it persists in introducing legislation of this character, it will not long remain in office..
.- The honorable member for Indi (Mr. Cook) confided to us this afternoon that he had attended a form of amusement which has recently been introduced into Australia ; I refer to the “ Tin Hare.” I remind him that recently a participant in this new sport was electrocuted. The honorable member may be in danger of a political misadventure not unlike that to which I have referred if he continues on his’ present course. No one who had given this measure more than a cursory glance could claim for it what the honorable member for Indi has claimed. Apart from its reference to a housing scheme, there is nothing in the measure to discuss. There is no justification for further interference with the Commonwealth Bank. The only question which arises in connexion with this measure is whether the Government is warranted in dividing the business of the Commonwealth Bank in a way which will affect its stability as a financial institution. It was refreshing this afternoon to hear the remarks of the right honorable member for North Sydney (Mr. Hughes). The right honorable gentleman realizes the seriousness of the Government’s proposal; he knows the beneficial effect that this great national institution has had upon the finances and the people of Australia. He knows, moreover, that any injury done to the Commonwealth Bank would adversely affect our primary producers. The speech of the honorable member for Wakefield (Mr, Poster) last week contained some sound logic. He warned the Government of the danger of destroying the Commonwealth Bank, and advocated greater cooperation instead of further divisions. That argument is logical and justifiable, and the procedure advocated by the honorable member is sane and safe. To that extent I am in agreement with him. Housing is only incidental to the legislation now before the House. Production and the economic wealth of the nation are very interesting subjects in their proper place, and I shall be pleased to participate in the debates that will take place upon them in the near future. But for the present it would be better for us to defer the discussion of these more or less abstract matters until we have before us legislation directly relating to them. The business before us now is the menace to the financial status of the Commonwealth Bank, and we should be wrong to allow ourselves to digress into a debate on subjects that are not strictly relevant to that important issue, “We should concentrate our attention upon the question whether the proposed division of the Commonwealth Bank and the creation of a new form of management for the savings branch is necessary or justifiable. I have read very carefully the Treasurer’s speech, in the endeavour to learn exactly what object he seeks to attain by this very radical departure. The honorable gentleman advanced two reasons why the savings branch should be separated from the general bank. He said -
If the Savings Bank were greatly to enlarge its functions, and provide money for the building and buying of homes, a much heavier burden would be laid upon the directors; and, consequently, steps would have to be taken to separate the administration of the central trading and rural credits departments from that of the Savings Bank department.
Sitting suspended from 6.15 to S p.m.
– The Treasurer advances as his first reason for the introducing of this drastic alteration the plea that- the sphere of the bank in providing money for the purchasing and building of homes will be so enlarged that the duties cast upon the directorate must become too burdensome. Is the honorable gentleman really serious? I should be surprised if he honestly regarded that as even a slight justification for the proposed alteration. It is advisable for us to investigate the nature of the allegedly exacting and burdensome duties that are to be cast upon the management of the bank. Such an examination will reveal the fact that the policy enunciated by the Treasurer is merely a pretence. The Commonwealth Bank, under its new constitution, will not deal with one application for, nor will it construct, a new home. I challenge the Treasurer to deny that. My contention is supported by the Treasurer’s own words, delivered in this House. He said -
It will be realized, therefore, that the Commonwealth Savings Bank will not come into the arena as a home builder, but merely as - the authority making the advance.
Making the advance to whom?- Not to the individual, but to an authority that is nominated by this measure, another agency that will undertake the obligation which the honorable gentleman would have us believe is cast upon this new commission. The Treasurer proceeded -
The Savings Bank itself will not enter into any house building, but will make the funds available through State or territorial administrations, savings banks and municipalities.
In reality the additional duties will be cast upon State savings banks, or local government or territorial administrations, as stipulated by this bill. The only way in which the Commonwealth Savings Bank will enter into the business will be by controlling a trust fund that is to be established. The Treasurer explained that that trust fund is to be made up of 50 per cent, of the increase in business of the bank, and 25 per cent, by maturing loans that are not renewed by local government bodies ; the remaining 25 per cent, to be met by a loan that will be floated by the Commonwealth Government. Actually the amount subscribed from the increased deposit and maturing loan moneys not renewed with the Commonwealth Savings Bank is to be a very small proportion of the amount placed to the credit of the fund, but the sum total of the alleged added responsibilities under this sham housing scheme will be the administration of that trust fund,! We must consider whether the establishment of this commission will relieve the management of the bank of any duties, and here I shall again quote the Treasurer, who said -
Through one of the commissioners being a member of the Commonwealth Bank Board of Directors, mutual understanding and cooperation between the two institutions will be possible, and the advice of the board of directors will be made available in connexion with the investment of the savings funds.
The board of directors will still be asked to advise as to the investment of those funds, therefore their task is in no way lightened, but the so-called additional and onerous duties, for the performance of which three commissioners are proposed to be appointed, are merely mythical and are invented as a flimsy excuse to justify the creation of this new bureaucracy. Even if they had some slight foundation, it was destroyed by the substantial arguments advanced by the Leader of the Opposition (Mr. Charlton), the right honorable member for North Sydney (Mr. Hughes) and the honorable member for Yarra (Mr. Scullin). Those honorable members reminded this House that during the period of the Great War, when Australia was in a most critical financial position, when it had heavy commitments and was called upon to preserve our primary industries, the Commonwealth Bank, then the dominating factor governing the financial affairs of the Commonwealth, was adequately administered by a Governor and DeputyGovernor, and without a board of directors consisting of seven gentlemen 1 consider the argument advanced by the Treasurer to be a weak one, and it does not do him credit. If he is the giant in financial matters that at times he pretends to be, he should put forward something a little more logical and more substantial than what he has advanced on this occasion. The action of the Government is not justified, no matter from what angle it may be viewed. I now come to the second reason advanced by the Treasurer for such an alteration in the policy of this great financial institution of the Commonwealth. This is what he advanced as his second reason : -
Consequently it is wise, in the Government’s opinion, that there should be a separate administration of the savings bank department, because of the difference between its operations and its outlook, and those of the other two sections of the Commonwealth Bank as constituted to-day. The savings bank puts its funds into long dated investments, while the policy of the central bank is essentially governed by the short-dated investments.
I quite- agree with the position as presented by the Treasurer in regard to that particular aspect of banking affairs. It is quite true that a. central bank is required to keep its assets in such a way that they can be easily availed of, and therefore short-dated investments are essential. With savings bank investment it is generally held that long-dated loans are the more desirable. But this_ has .always been the policy of the Commonwealth Bank. We are not departing from that principle now. There is nothing new about the procedure of the central bank putting its funds into shortdated investments, and . the savings bank putting its money into long-dated investments. Therefore the second reason advanced by the Treasurer as justifying the Government in taking the present action is nullified by the fact that there is nothing new in the proposal. I, therefore, again charge the Treasurer, if he has any adequate reasons for this alteration, to speak now or henceforth hold his peace for ever. He has not placed a substantial case before the House in justification of this drastic change, and he has shown himself as one devoid of solid and sound arguments. He has not advanced any proof that the operations of the bank previously have been unsafe or uneconomical. The country will require him to give some more logical reasons for what he is proposing. The division of the Commonwealth Bank into two parts is an entirely new proposal. There is reported in the Australian Insurance and Banking Record of July, 1926, a statement of the Treasurer’s taken from his budget speech of last year, concerning this housing scheme, and how it is proposed to finance it. But there is not one word’ in that particular statement about a division of the Commonwealth Bank’s interests; and if there had been any thought of such a division in the mind of the Treasurer at that moment, surely he would have mentioned it. The Treasurer stated that the Government had been in consultation with the Commonwealth Bank Board regarding this matter. If they had then come to a decision regarding the necessity of dividing the Commonwealth Bank, and making the savings bank a separate entity, it would have been mentioned in this speech, and, this particular journal would have been one of the first in Australia to pick that out, and comment on it.
– The Board of Directors might have suggested it.
– The Treasurer, in speaking of other features of this scheme, made no mention of it.
– Where did it ever appear that such a suggestion was made?
– This is a responsible journal, truly authoritative on banking matters, and if there had been any such idea . iu the mind of the Treasurer, or if any such suggestion had come from the Commonwealth Bank Board, the honorable gentleman would have mentioned it in ‘ that speech, and it would have been reported. I cannot understand why at this moment we should be presented with this line of policy. It appears to me that the Treasurer and the Government have been largely impressed with the statement of that eminent financier who was in Australia a short while ago, Sir Ernest Harvey. That gentleman, in a speech before the Victorian branch of the Economical Society on the Sth April, 1927, reported in The Economic Record for May of this year, sets forth as the fifth principle that should govern central banking: “A central bank should not ordinarily compete with the trading banks for general banking business.” lc does appear to me that this move on the part of the Treasurer is taken with the idea of isolating the central or parent branch of the bank from the savings department, so as to eliminate from its operations anything that would make it resemble a trading bank. No wonder, after his efforts to make the Commonwealth Bank really a bankers’ bank and t.o destroy its effectiveness as a true trading bank operating in the interests of the people, the Treasurer can say to us that this bank has earned the confidence of the private banking institutions. I recognize the necessity of a central bank. It is well that there should be a bank for the nation; but I do not think it should lose any of its essential features as a competitor with the private banks. Otherwise, it becomes merely a clearing house for the private institutions. The right honorable member for North Sydney (Mr. Hughes) declared clearly, with emphasis, and quite rightly, this afternoon that the stability of the bank was the great factor that had earned for it public confidence. That is demonstrated by the move that has been made in the realms of private finance from 1911 onwards. There has been a steady and effective consolidation of private banking interests in Australia. Iu 1911 there were 22 private banking institutions trading in Australia, while the latest banking record gives us the in- formation that there are now only fifteen. There have been mergers, consolidations, and co-ordinations, all making for greater security and stability. Yet tlie Treasurer departs from the principle observed in the operation of private banking aud financial institutions, and goes the other way. He is prepared to take the path downward, rather than the path upward and onward. The rule he applies in this particular matter is contrary to that which has governed the operations of those who might be regarded as worthy of our attention. Here is a rather significant advertisement. In one of the most recent newspaper advertisements of the Commonwealth Bank I find that the main reason given for trading with the bank is that it is “ two banks in one.” Those words appear in bold type. It is on these grounds principally that the public is invited to place its business with the institution. But the Treasurer now seeks to separate the sayings bank from the general bank. By dividing it in this way, he undermines its stability, and subtracts from its influence as a potent factor in the financial life of the nation. Honorable members on this side of the chamber, as well as a number of supporters of the Government, have stated quite emphatically that they regard this as a wrong policy. They desire to add to the opportunities of the bank to become a living force in the trading world, and to multiply its advantages to the people and the nation. Every student of the situation sees quite clearly that the object of the Government in introducing this measure is to make the bank more than ever ‘ a central bank, and to remove from it every semblance of a trading bank. I should not be at all surprised if within a very short while the Treasurer were to introduce a bill to separate the rural credits branch of the bank from the remainder of it. That would be the third step in making it a purely central bank, and it would render the institution less effective than ever iu meeting the needs of the primary producer in particular, and the nation in general. I should think a good deal more than I do of the Treasurer had he made a straightout declaration that the Government .intended to convert the institution into a central bank, but he lacked the courage to do so, and is seeking to achieve that end by clouding the issue, and misleading the House and the people. The right honorable member for North Sydney (Mr. Hughes) pointed out very clearly this afternoon that the housing scheme, in so far as it was related to this bill, was nothing more than a pretext and a sham. There can be no doubt whatever that the object of the Government is to place the Commonwealth Bank in a position which will force it slavishly to obey the dictates of the private banking institutions. It is to cease being a competitive force, and to become a banker’s bank. But the time is coming when the people will declare in no uncertain way that they have no time for men who misuse their power, and destroy the foundations of the greatest financial institution in the country. For many years the Commonwealth Bank has stood as the Gibraltar of our financial kingdom, and the public has sufficient intelligence and commonsense to deal effectively with those who attempt to undermine it. There is no excuse whatever for interfering with and impairing the bank. If this bill becomes law the institution will be unable, satisfactorily, to accommodate the people with the financial help they need in their times of stress. I oppose the bill, and I trust that a sufficient number of honorable members will vote against it to ensure its defeat. The Treasurer deserves a sharp rebuke for tampering with this great public institution which, has meant so much to this great continent.
.- During the course of this debate some persons of low degree’ have imputed to the Government and the Treasurer the unworthy motive of desiring to discredit, dismember, and destroy the Commonwealth Bank. I shall make no insinuations of that kind. For the present I shall keep my views on that matter to myself. But if that is really the object of this bill, I must say that I would . far sooner see the Government, with one short, sharp stroke of the axe. destroy the bank than slowly discredit, it in the public eye and then strangle it. I heard the Treasurer make his speech on the second reading of this bill. I trust that he will excuse me for saying that I did not understand a word of it. Thinking that this might be due to some fault of my own I carefully read the Hansard report of it; but I still failed to grasp its full meaning. So faras I could discover, the speech consisted of three lecturettes. One of these was on thrift, the benefit of which every honorable member knows and respecting which the Government has said much but practised little. The second was on the value of rural credits, about which I need to say nothing. The third subject of his dissertation was liquidity of assets, and the advantages that accrue therefrom. I do not intend to discuss that matter at length/ for it has nothing whatever to do with the purpose of the bill. The Treasurer made it clear that it was desirable that assets should be in liquid form, so that they could be converted into hard cash in times of stress. That was such an excellent idea, he said, that prohibition had been placed upon the general banking department of the bank investing its funds in “ trading bills of more than 120 days currency.” That was to be the limit. The Treasurer then proceeded to extol the virtues of the rural credits system of the bank. In this instance, also, he said that only “ short-time credit “ was made available. The accommodation in this case was for a maximum period of 365 days. I should like to ask who needs greater consideration - the people who have much, or the people who have little; the man who can deposit large sums with the general department of the bank, or the one who .puts by tiny sums in the savings bank? Is the man who can deposit £5,000, £10,000 or £50,000 with the general bank more worthy’ of consideration than the man who struggles to put by £5, £10 or £20 in the savings bank? Who, I repeat has the greater need of liquid assets? By some curious process of reasoning the Treasurer has come to the conclusion that the poor man merits less consideration than the wealthy man. Turning from that aspect of the measure the Treasurer proceeded to relate the history of the bank. It has been said - I do not remember at the moment whether by a newspaper or by an honorable member of this Parliament - that the history of the Commonwealth Bank only began when the present Treasurer assumed office. Apparently the bank did not function to any considerable extent prior to that time, But some of us know that it did an immense amount of work before the present Treasurer was heard of in political life. The honorable gentleman told us that the institution had done next to nothing up to the time, in 1924, when, to adopt a phrase of his own profession, he gave it its’ first injection. The fact is that for at least fourteen years prior to that time it had been allowed to operate untouched by any political finger. Every Treasurer, from the time the bank Avas founded until the present Treasurer entered the arena, allowed’ the institution to function in an untrammelled way. The honorable gentleman’s predecessors in office rightly assumed that the persons best qualified to manage the affairs of the institution were bankers who had been in the busness all their lives. Until quite recently the governor of the bank had full authority and power, and was supplied with whatever money he required to develop the bank; but the present Treasurer had to put a political finger in the pie. He told us that in consequence of the appointment of a board of directors to control the institution it had made wonderful progress. Such statements are easily made, but not easily proven. Some newspapers - I should not dare to say Labour newspapers, for they are untruthful; but some of the great Nationalist newspapers, which are the custodians of the truth - have dared to say that the bank did well until the present Government terrorized Parliament into saying that a board of directors Avas necessary to govern it. It has been, said that the present Treasurer can re-construct banks and destroy them, and that if the facts are not in accordance Avith what he desires he simply changes the facts. But on this occasion the honorable gentleman failed to produce a single fact to support his assertion that since the appointment of a board of directors, the bank had made wonderful progress. The statistical records that are available provide us Avith conclusive evidence to the contrary. There is not a single outstanding circumstance which indicates that the general department of the bank - I am not non speaking of the savings bank depart- ment - has made any progress whatever in the last few years. As a matter of hard fact the assets, deposits and revenues of the general bank represent a smaller percentage of the banking business of the country than ever before. The Commonwealth Bank business is as stagnant as a ditch. That observation is capable of proof. It is not a bare assertion, such as the statement of the Treasurer that the bank is making wonderful progress. The bank, in its present condition, may well . be likened to a toad in the crevice of a rock, or to a stagnant, stinking ditch. The kind of progress that the bank is making is such as a vessel makes when its engines are working backwards. Now returning to the savings bank operations of the Commonwealth Bank, the institution has the peculiar advantage of being .able to control 100 per cent, of the savings bank deposits in Queensland. The workers of that State must go to the Commonwealth Savings Bank to make their deposits. That is their only savings bank. We are told that the records shon that the savings bank deposits of the people of Australia have increased by millions of pounds. But it is a very small proportion of that increase that is controlled by the Commonwealth Savings Bank, and it is less to-day than it was in 1924. As a matter of fact, the board of directors of the Commonwealth Bank stands still. The bank is making no progress. The reason, for this is apparent to any one who has an opportunity to go round Australia. In towns and cities where an institution of this kind, based upon the credit of the nation, should be standing as a monument to the nation’s capacity, you look in vain for a worthy edifice. You see instead, if there be a. branch of the Commonwealth Bank in the town, a dirty, dingy building, not fie to compete Avith the other institutions with which it is supposed to compete. Brunswick, in the Bourke electorate, may be accepted as of the fair average standard of Australian cities. On a Friday ‘night, when the worker in Bruns.wick is returning to his home with his weekly wages, he sees on one side of the street a bright, beautifully lighted, thoroughly equipped institution, owned by the State Savings Bank Commissioners, who are offering a higher rate of interest than the Commonwealth Bank is offering. On the other side of the street he sees a dirty, dingy structure that oyer 30 years ago was used as a post office, and was subsequently utilized by the Defence Department as a store. “When it could no longer be used as a post office, and was no longer required by the Defence Department, the savings bank business of the post office was transferred to it. Is that the way to develop the Commonwealth Bank? What is true of Brunswick is true of most other towns in this vast continent. It is an outstanding fact that the percentage of business done by the Commonwealth Bank has dropped. It is wrong to say that it is improving. It was in 1926 that the Treasurer tried to hatch another addled egg. He came forward with his great rural credits scheme. He told us of the wonderful work that the bank would accomplish: It was pointed out at the time that there was nothing it was proposed the “bank should do under the new legislation that it could not do, and had not been doing before. As a matter of .fact, the bank was then doing far better work in connexion with rural credits and the development of the primary products of Australia than it has done since. But the Treasurer had to try to secure public admiration. He says now : “ See the marvellous work we have accomplished under the Rural Credits branch of the Commonwealth Bank. We have advanced £8,000,000 with which to develop the primary products of Australia and help the primary producers.’’’ With all due respect to the honorable gentleman I cannot find in the records of the Commonwealth Bank anything to indicate that any such advance has been made. If the Treasurer has any duty to perform, it is to furnish the House with proper information, not at the end of the debate, but at the beginning. If the information was at his command it was his duty to produce the records of the bank to show how the rural credits had been advanced) and how the mOney was made available. I can see nothing in the records to indicate what has been done. Of course, we know that the deposits in the general bank exceed £30.000,000, and that those in the savings bank branch exceed £40,000,000. We also know that half of the amount to the credit of the savings bank branch comes fi-om Queensland, but we do not draw from the savings bank depositors of the two great States of New South Wales and Victoria one penny more than we did three years ago. According to ‘ the records up to December last, £250,000 had been advanced by the rural credits branch of the bank, and a profit of £7,800 had been earned; but that is not much of a return on £8,000,000. Either the rate of interest was exceedingly low, or the rural credits branch of the bank is not a paying proposition. I can find nothing to indicate that £8,000,000 has been advanced, or, if that amount has been advanced, where it has been invested. All I can see from an examination of the balance-sheet of the bank is that money has recently been turned into government securities. But that has always been done. I come now to the egg which the Treasurer is at present trying to addle. He says, “ Gentlemen, we are about to undertake a great work. We want an alteration of the act to accomplish a great social task.” But, as a matter of fact, the Government has no wish to accomplish this task. Two years have gone by since it made the promise that it would undertake a great housing scheme. After the last election one journal said, “ It now rests with this great Government to bring to speedy fruition its promises.” Promises they still are, and promises they will still remain when the next election comes around. The great housing scheme that the electors were lead to believe would be inaugurated has not yet been realized. It was to have been undertaken through the agency of the Commonwealth Bank. But let us accept the Treasurer’s statement at its face value, and admit for the moment that th Government really wishes to carry out a social function, and is anxious to inaugurate a housing scheme. How does it propose to set about it? By cutting the’ Commonwealth Bank in half. Solomon on a certain well-known occasion ordered that an infant be split into halves, and thus showed a wonderful knowledge of human nature. But what he did, in his wisdom, is far from justifying the proposal of this Government to split the Commonwealth Bank into halves, and so destroy its ‘ capacity. The Government does not propose to carry out a housing scheme itself, but will allow tlie Commonwealth Bank to do the work. What work? That of lending to the lender, who will lend to some one else to enable him to build a home. “What do the administrators of the Bank do at the present time when they are anxious to invest £10,000,000 or £15,000,000? They simply go into the money market and buy Commonwealth and State bonds or municipal securities. Additional administrators are not necessary to do that sort of work. And if more administrators are not required to invest a few million pounds in bonds, can any one tell me why it should be necessary to have additional administrators so that the Commonwealth Bank may lend £2,000,000 or £3,000,000 to the States? It is not to be thought for one moment that the Bank will lend £1,000 here, £800 there, and £500 in some other direction. Nothing, of the sort is to be done. In fact, the whole housing proposition has no reality, and can be put on one side, We have then ‘to ask ourselves, “ What purpose will this bill serve?” We are told that three new commissioners must be appointed because of the vast additional work the Commonwealth Bank will have to perform. Yet, no additional work will be imposed on the bank, because it will not be doing what it was supposed it would do. The Treasurer says, “ If there is £40,000,000 in the bank to-day and the amount is increased to £42,000,000 to-morrow, half of the additional £2,000,000 will bc set aside for housing purposes.” But how can the bank lend money when its business is stagnant and when the deposits in the post offices do not increase? I asked the -Treasurer how he proposed to divide the staff of the bank, and he told me that it would be one indivisible staff. It is to be a case of two in one. The staff will be divided and yet not divided, separated, and yet inseparable, interwoven, interlocked, joined together, indivisible, but still performing two distinct functions. What will happen in a place like Brunswick, where there is only one officer in the bank?. What portion of that man will belong to the savings bank and what to the general bank itself? If he takes a thousand deposits from working men, is 99 per cent, of the amount received to be regarded as savings bank business, or is only 50 per cent, of it to be so regarded? What can any one see in this proposal but sheer pretence, a delusion and a sham, and a deception of the public. It is nothing but Dead Sea fruit which turns to ashes in the mouth. It is true that every year thousands of infants are born in Australia and thousands of people come to our shores, rendering necessary the building of more homes. I know how highly desirable it is for some Government - Country party, Nationalist, or Labour - -to meet the requirements of the general public by going into the slums of our great cities and destroying them as destructive of the health and morality of the people, and by setting up, as it were, a new Jerusalem where slums would no longer exist. A Government that did that would perform a useful social reform, and I would by my voice and vote render it all my aid. I would not allow the mere fact that I sat on the opposite side of the chamber to stand in the way of my doing so. I would not be found offering carping criticism of a genuine and bona fide effort to bring about a great social reform. But what we have before us to-day is not a bona fide effort. It will do nothing but leave us exactly where we stand to-day. Hope deferred maketh the heart sick. We have seen vast sums of borrowed money spent on the importation of settlers from overseas. No better purpose could be served by the expenditure of borrowed y money than the building of new homes . for the people. If this Government had set aside £10,000,000 and commenced a gigantic housing scheme, every honorable member would have given it his endorsement. But the scheme the Government is now putting before us is a delusion aud a sham. It is, 1 say, Dead Sea fruit. Ministers propose, with the aid of a stagnant bank and a board of directors that has no desire to increase the functions of the institution, to lend money to the States. The proposal is absurd, because we know that the bank is not increasing its revenue and has insufficient means to carry out the object the Government has in view. But Ave are not told the real purpose of the Government. It is something more than is disclosed in the bill, and it would be interesting to the House, and more so to the country, to learn what that purpose is. It is claimed that this- measure should have the endorsement of the men who are administering the bank. 1 do not know that their endorsement or their rejection of it would be any reason for its acceptance . or rejection by this House. The directors themselves have not received our endorsement as a party. We have always declared that they are not qualified to administer the Commonwealth Bank. The safety of the institution is secured, not by figure-heads or guinea pigs, but only when its control is in the hands of capable men. There is not one among the managers and deputy managers and responsible officials of financial institutions in Australia who can see any good in a division of the functions of the Commonwealth Bank. With such a multiplicity of authorities as the bill contemplates, the officials will find themselves pushed from pillar to post. The institution has been prevented from expanding normally, and its utility as a national bank has been destroyed, because this Government has kept it stagnant. When an officer, whether young or old, enters the service of such an institution as the Commonwealth Bank, and devotes himself enthusiastically to the work of helping it to progress, he hopes that in the course of time he will receive promotion. But what incentive remains today for any member of the staff to give his best services when progress is re- >tarded? The rehabilitation of the bank will l>e brought about, not by this Government, but by other men, whatever part they may play in public life in future, who visualise a. great nation with a national institution that will, to a large extent, control its international and internal financial policy. It will be done by men of public spirit who are alive to the dangers of their present surroundings, and whose policy will not resolve itself into a mere spinning of words.
– Honorable members op- posing the bill find themselves between the horns of a dilemma, and they have exhibited extraordinary agility in trying to avoid first one horn and then the other. They say, in one breath, that too much has been done by the bill, aud, in the second, they tell us that too little has been accomplished. The honorable member for Bourke (Mr. Anstey) occupied some time in pointing out that the proposal would result in the destruction of the institution, and then he stated that it has already been destroyed, although the policy regarding the savings bank department has not been changed since the inception of the institution sixteen or seventeen years ago. Honorable members have attempted to set up a bogy by saying that the bank is being crippled as the result of the Government’s activities. There is a short and direct answer to this criticism. The board of directors was appointed in October. 1924. For the year preceding that, the total profits of the bank omitting the note issue and rural credits departments amounted to £250,686. During the next year when the board of directors had been appointed, the profits increased to £334,557. In the following year they amounted to £461,297, and for the year ended 30th June, 1927’, they were £580,987. Each year we find an increase in the profits of about £120,000. Yet honorable members appear to think that the public can be gulled into believing that the usefulness of the bank is being destroyed. The whole attitude of honorable members opposite has been one of resistance to all change. This is shown by the Labour party’s course of action in connexion with the bank’s establishment, the speeches of Labour members three years ago, when the board of directors was appointed, and their remarks when the rural credits department was instituted two years ago. Labour members boast that they belong to a progressive party; but I am afraid that if they had been present at the Creation, they would have even attempted to interfere with the process of creating woman after man because it had not been done before. Their speeches during the last few days bring to my mind the fights that took place among the members of my profession against developments in medical science. They are like troglodytes sitting in their caves, and remind me of the opposition offered to the advances in surgery that were made by Lord Lister, and of the objections to the use of chloroform, when it had been discovered by Sir James Simpson, for the relief of the suffering of women. The right honorable member for North Sydney (Mr. Hughes) gave us a disquisition upon the powers of the Commonwealth Bank, and said that nothing had been done to enlarge its functions. He stated that there was no necessity for the rural credits department. But what was the position in 1921, 1922, or 1923? Did we not have the spectacle of the great primary industries of Australia, unable to carry on their pooling arrangements, forced to hover round the Government, like black gins outside an aboriginal camp asking for a bone. They could not obtain a penny from the Commonwealth Bank until the Government had guaranteed the advances required. The honorable member for Dalley (Mr. Theodore), when Premier of Queensland, brought certain pools into operation in Queeusland. It became the fashion to say that the rural credits scheme was worthless, because it had been brought into existence by the opposing political party, but since the recent State election, about a dozen products have been especially proclaimed to be primary products for the sake of bringing them into a position to utilize the rural credits department, and I was informed there recently that the rural credits department of the Commonwealth Bank was one of the most beneficent institutions the producers had at their disposal. In New South “Wales and Victoria last season the wheat pools were able to obtain money at 6 per cent, where previously 6b per cent, had been paid on overdrafts. It is said that this Government is trying to destroy the Commonwealth Bank, when,, as a matter of fact everything it has done has been to develop it. The profits I have quoted furnish one test, and I will show that the gross figures have grown, not during a Labour regime, but while a non-Labour
Government has been in office. A nonLabour Government made arrangements with a Labour cabinet in another State, and brought, the Queensland Savings Bank deposits into account.
– That was done by the governor of the bank, not by the Government.
– Then the first big accretion took place. We come to another increase in the figures when the note issue department was established in 1920 by a non-Labour Government. Some £50,000,000 was thereby added to the aggregate funds. Vet we are said to be trying to destroy the bank. The present Government came into office iu 1923, and in the following year it took action to enable the bank to function as a central bank. The necessity was laid upon the Government because of the policy adopted by the Labour party, which went to the country in 1910 with a declared intention to create a bank of issue, exchange and reserve. When the party was returned to office, did it carry out that policy? No. It put the note issue in the Treasury, and kept it there while the party remained in office. The man who is said to be the real author of the Commonwealth Bank is Mr. King ‘O’Malley. In a pamphlet published by him he summed up the genesis of the bank in these words: -
Immediately after the formation of the Labour Government in 1910, a banker’s conference was held in Melbourne, which was attended by the then Prime Minister and Attorney-General, Messrs. Fisher and Hughes. Neither possessed any technical financial banking knowledge, and were easily convinced that there was no profit in banking, so the Treasurer informed us that the note issue would be withdrawn from the trading banks and placed in the Commonwealth Treasury. As the note issue is the fundamental .capital of a national bank, this meant the death of the bank. :
The matter was discussed in caucus, and Mr. O’Malley went on to say -
Fisher and Hughes dominated the Cabinet, and as Fisher was the Treasurer, the oracle of finance and the final analysis, and Hughes his expert legal adviser, such authorities ended all debate; and when the word passed “No bank,” it was final.
Then he explained the methods adopted to induce the caucus to agree with him, and as a result of his activities the bank was fully brought into being as a result of the Labour party’s legislation. He further said -
The bank was then put in the Government’s programme, and was- duly established without the note issue, rural credits, the States as partners, or a board of directors.
When the present Government attempts to add to the bank’s functions by providing what Mr. O’Malley complained had been omitted, and tries to make it function as a national bank, with complete control of the financial situation, violent opposition comes from the Labour party. Sneering and ridicule are heard even from the right honorable gentleman who was at that time a Labour man. He says there was no necessity for rural credits legislation. Then why did Mr. O’Malley, in 1917, move for the establishment of a rural credits branch? The records show that he made a long speech, and when he sat down he could not find one member of his own party willing to second the motion. I have already shown what has been done by this Government, not to cripple the Commonwealth Bank, but to enhance its prestige. I have indicated the increasing profits that have been made. The note issue has been brought into the bank, and made an integral part of it. The note issue was operated during the whole period of the war by the Treasury. That was altered by the creation of a note issue department of the Common- wealth Bank, which, however, was like Robinson Crusoe, alone on an island, and unable to assist the finances of the country in the way intended originally. In .1923, because of the isolation and the separation of the functions of the control of the note issue from those of general banking, the bank was not functioning properly. There was a notes board in existence at the time. The right honorable member for North Sydney (Mr. Hughes) says he does not believe in hoards. Why, then, did he appoint the notes issue board? Unfortunately he did not make the note issue part and parcel of the bank itself, with the result that when the exchange position became so difficult in 1923 there was no machinery to make available in Australia sufficient cash for our requirements against securities in London. The honorable member for Dalley (Mr. Theodore) has asked for definite instances to show that the bank is now functioning satisfactorily. In 1925, when the gold basis was restored, the Commonwealth Bank, because the note issue was entirely under its control, was able, within a month, to reduce the rate of exchange from about £3 10s. per cent. to. 5s. per cent. That meant at least an additional £5,000,000 to the people of Australia in the form of additional prices which they received for their produce. It meant also a greater amount of employment in this country for primary and secondary industries. It is all fudge and nonsense for honorable members opposite to say that the Government has done anything to interfere with the usefulness of the bank. The Leader of the Opposition endeavoured to show that the Ministry is setting out to do something which will destroy the whole of the internal machinery of the bank and perhaps destroy its entire structure by preventing it from functioning properly. This is not so. The figures for the several departments of the bank are now kept absolutely separate and distinct. The operations of the general banking, rural credits, note issue, and the savings bank departments are presented inside the bank as separate and distinct balance-sheets, but they are brought together in the aggregate balances at the end of each half-year and published for general information. If, however, honorable members opposite think that, if all the figures are not brought together, the prestige of the bank will be prejudiced, I shall have no objection to a provision being inserted in the bill to make possible the publication of a. statement of the combined accounts of the Commonwealth. Bank and the Savings Bank.
The Government has given very serious thought to its housing proposals. It has discussed them at great length with the directors of the Commonwealth Bank, and with State housing authorities, because the object is to prevent any duplication of effort. There is real need for Commonwealth assistance, and I venture to say that the Government’s proposal will supply that need. Last year Ave asked the Commonwealth Bank Board if it could handle the scheme. The board pointed out that its duties were of a very onerous nature, and that the situation presented certain difficulties. On this point I should like to emphasize that it is distinctly unfair on the part of honorable members opposite, when speaking, of the Commonwealth Rank Board, to suggest that the members of it do practically nothing. Those who frequent the head office of the bank in Sydney must know that members of the board are in attendance three or four clays a week, consulting with and giving ad vite to executive officers of that institution. The work of the board in connexion with the notes issue and general currency control causes a tremendous amount of thought, aud takes up a great deal of time. It is not too much to say that the death of Sir John Garvin at the comparatively early age of 54 years was in some measure, due to the unstinted service which he rendered to the bank as a member of tlie Note Issue Board and the first chairman of the bank board. The duties imposed upon the board are exceedingly onerous. In the rural credits department, for example, it is the duty of the board to determine the magnitude of the advances, tlie percentage of advance, how they may be allocated, and so on. All these matters call for a great deal of consideration. It was felt that the housing scheme would present an entirely different set of problems from the ordinary financial questions with which the board has to deal. The board advised that its operations would probably be overburdened if it were loaded with the housing scheme. It represented to the Government that, as it was the custodian of about £140,000,000 worth of assets, it could not very well give its attention to this proposed new phase of the Government’s activities, and suggested that some other means should be adopted. These overtures took place in July of last year, and when the board passed the following resolution, which I should like to read for tlie information of honorable members : -
This board feels that to accept the responsibility of the administration of the Federal Government housing scheme as part o£ the functions of tlie Saving Bank department would be overweighting the work falling upon the institution; and further that such functions are in no way related to the genera! banking business or to that of a note issue bank or -a reserve bank, and the board is, therefore, of the opinion that, under tlie circumstances, it would be wiser to accept the proposal of the Government to separate the Savings Bank department from the bank for the purpose of enabling the carrying out of the housing scheme. It is better in the interests of the bank as a whole that the Government should take the necessary steps to bring about the separation proposed, and thu board will be glad to assist and advise the Government to the best of its ability as to the method of effecting the changes necessary to carry this out.
– That is just what I would have expected from the board.
– That is the attitude of the Commonwealth Bank Board which, despite what has been said in criticism of it, has worked very courageously and earnestly to increase the business of the bank as disclosed iu the increased profits.
– It is not, because the profits of the note issue are included.
– The honorable member is absolutely wrong. The profits last year of the general banking business, including the savings bank, were £580,9S7 ; the profits of the rural credits department were £19,976, and the profits of the note issue department were £1,136,476. I wish to make it absolutely clear that the profits of the general banking business have increased at the rate of about £120,000 a year since the appointment of the board of directors. The bank board considered that the course now proposed by the Government was the wisest one to adopt, and it advised the Government accordingly. Despite the jibe of the right honorable member for North Sydney (Mr. Hughes), the most important function of the board is to protect the central banking activities of the bank. It is absurd for any honorable member to ridicule the functions of the Bank of England in the financial structure of Great Britain. Its particular business is to stand, like the rock of Gibraltar, against any assaults on the financial stability of the Mother Country. That is exactly the way in which we should, by means of the Commonwealth Bank, endeavour to buttress the financial structure of Australia. The Commonwealth Bank Board is thinking along these lines.
– The functions of the two banks are not precisely the same.
– The function of the Bank of England is to protect the credit of the Mother Country. I may add, though the right honorable member for North Sydney may be unaware of it, that the Bank of England not only stands behind the finances of Great Britain, but it also exercises its influence to check high rates and undue profits on the part of the trading banks. If necessary, it will go into the ordinary banking business to achieve its purpose. If honorable members opposite, in their references to Sir Ernest Harvey had also quoted his statement that the primary function of a central bank was not merely to make profits, but .to protect the credit . of ‘a country and to ensure financial stability, it would have been a fair statement to have incorporated in Hansard. As a result of a request that the Bank of England should send its representative to Australia, Sir Ernest Harvey came here, and for three months devoted his attention to Australian banking methods. Later, hu suggested that if the Commonwealth Bank were functioning more fully as a central bank, it would be of immense value to Australia, particularly in relation to exchange matters and the flotation of loans. Since the board of directors was appointed to control the bank, and the note issue control placed in its hands, my position as Treasurer in relation to the flotation of loans has been much easier than it was previously. No one who has not experienced the change can realize the difference between the position now and what it was four and a half years ago. when I first became Treasurer of the Commonwealth. Sir Ernest Harvey made it clear that if the Commonwealth Bank, subscribed to the generally accepted principles governing central reserve banks, it would be admitted to the international circle of those banks and thus reap the benefits of co-operation with the other central banks of the world. At present, all overseas exchanges are settled through London. The Commonwealth Bank, as a bank of central reserve, would enter into relationships with the Bank, of England similar to those which exist between the Bank of England and the central reserve banks of other nations. If at any time in the future Aus tralia should desire to settle her exchanges direct with any other country, the Commonwealth Bank would similarly receive the co-operation and support of the central reserve bank -of that country. Sir Ernest Harvey pointed out that the savings bank business did not come within the ambit of the functions of a bank of central reserve, and, therefore, the severance of the Commonwealth Savings Bank from the Commonwealth Bank would in no way affect the stability or usefulness of the bank in its operation as a central reserve bank, but would bring it into line with accepted practice in central reserve banking. Sir Ernest Harvey went on to say that if the Government found it inconvenient to deal with that aspect of the question by legislation, the central banking requirements would be satisfied if the accounts of the savings bank department were kept distinct and separate from those of the other departments of the bank’s activities. From the point of view of the prestige of the Commonwealth Bank, this recognition as a central bank is important. During this debate it has been suggested that the Commonwealth Bank would lose its prestige if it functioned as a central bank. That is not so; the new arrangement would increase its prestige, for the reason that the whole of the cash reserves of Australia, excepting those needed for “ till money “ for other banks, would be at its disposal. The gold reserves of the various banks added to the gold reserve of the Commonwealth Bank, represent from 105 per cent, to 110 per cent, of the note issue. That is a satisfactory position. There is no reason why some of those reserves should not be used for the benefit of the whole of Australia. And they can be so used if a central banking system, with the Commonwealth Bank as its centre, fully functions. The object of the Government in introducing this measure is to enable the Commonwealth Bank to render an improved service to the people of Australia. It has been said that the Commonwealth Bank is losing ground ; yet it has more, branches now than it had before the appointment of a board of directors. It is true that last year the increase in savings bank deposits were less than they were in previous years. Even in Queensland, where the Commonwealth Bank has undisputed control of the savings bank business, the increase in deposits are lower than in other years. That is due to the drought through which that State has passed and the general tightness in money all over Australia. It has been said that the business of the Commonwealth Bank in many towns is conducted in dingy buildings, but, even so, the board of directors is not responsible for that. Those positions were chosen by the original governor of the bank. The policy adopted by the first governor of the bank in relation to the buildings in which it operates has not been altered by the board of directors. Another reason for the small increases in the amount of the Savings Bank deposits is that the interest rates of the Commonwealth Savings Bank are lower than are those of the various State savings banks. That policy was inaugurated, not by the board of directors, but by Sir Denison Miller. I appeal to honorable members to support the second reading of the bill. In committee the various clauses can be discussed as they come before us. On behalf of the Government I am prepared to include a new clause to enable the accounts of theCommonwealth Bank and of the Savings Bank branch to be combined, in one statement, and after certification by the Auditor-General, to be presented to Parliament in that form. That would dispose of the only argument raised during this debate - that the Government’s proposal would mean a loss of prestige to the bank by separation of its aggregate figures. The Leader of the Opposition (Mr. Charlton) complained that- an explanatory memorandum had not been issued to honorable members in connexion with this bill. I point out that the procedure adopted in connexion with this measure is the same as that followed in 1920 when the Note Issue was dealt with, and also in 1925 when the rural credits department was established. The measure before us contains a number of new clauses.
– A large portion of the principal act will be repealed by this measure.
– To comply with the request of the Leader of the Opposition would necessitate the re-printing of practically the whole of the principal act. If, however, honorable members feel that it would be a convenience, I am prepared to have a memorandum printed as suggested; but I remind them that it will be an unnecessarily costly undertaking, and will necessitate delay in dealing with the bill. If honorable members will compare the bill with the Consolidated Commonwealth Bank Act I think they will have no difficulty in understanding it. I confidently appeal to the House to pass the second reading.
Question - That the bill be now read a second time - put. The House divided.
Majority . . . . 13
Question so resolved in the affirmative.
Bill read a second time.
Clause 1 - (1.) This act may be cited as the Commonwealth Bank (Savings Bank) Act 1927. (2.) The Commonwealth Bank Act 1911- 1925 is in this act referred to as the principal act. (3.) The principal act, as amended by this act. may be cited as the Commonwealth Bank Act 1911-1927.
.- In reply to my request earlier this evening th at this bill and the relevant portions of the Commonwealth Bank Act should be printed in comparative form, the Treasurer said that all previous bills of the kind had been presented in this way. If the committee is to deal with the measure intelligently it must have a memorandum of the principal act with the proposed alterations shown in black type. Not even those honorable members who voted for the second reading will understand what these clauses mean unless they have an opportunity to compare them with the consolidated act, or have somebody who is capable of explaining in detail the effect of the proposed amendments. Clause 7 extends over three and a half pages, and notwithstanding what the Treasurer said to the contrary, the proposed sections are not entirely new ; many of them are in the existing act. On previous occasions amending bills have been accompanied by memoranda, but to-night the Treasurer has raised an objection to that course on the ground of cost. “Why should the cost be greater in Canberra than it is in Melbourne? In any case, if a memorandum is essential to the intelligent study of the bill, why should not the custom of the past be followed? It is in committee that a bill is shaped, and the form in which this measure is presented is no credit to the Treasurer or to others who are responsible. How are honorable members to know what this bill is amending or repealing? I suggest that we report progress so that the Treasurer may have an opportunity to have a memorandum prepared. I personally have taken the trouble to study the bill in conjunction with the act, but other honorable members have not had time to do that, and cannot do it satisfactorily while the clauses are being dealt with in committee. At this stage party differences should disappear, and all honorable members should endeavour to improve the bill. The short title clearly confirms the statements of honorable members on this side of the House that this bill is setting up a separate institution. The first sub-clause re-. fers to this measure as “ the Commonwealth Bank Savings Bank Act,” and the principal act under which the Com mowealth Bank operates is described as the Commonwealth Bank Act. I suggest that it would be a wise precaution to strike out the words “ savings bank “ in the short title, and thus avoid at the outset committing ourselves to the principle of separating the savings bank from the bank that deals with general business. The Treasurer has admitted the force of our contention that this bill will separate the savings bank from the general bank, by offering to make an amendment requiring that a combined balance-sheet shall be presented to the Auditor-General. That endeavour to take the sting out of this measure will not remove the objection that two distinct institutions will be created and separately administered with consequent increase of cost. If the Treasurer is prepared to retain both savings bank and general bank business under one head, there is no need to create a second controlling body, and he might as well agree now to eliminate the words “savings bank “ from the title.
– The request by the Leader of the Opposition for a memorandum is extraordinary in view of the facts; and the reasons he advanced were as futile as his objection to the short title. The honorable member says that the passing of this clause, which declares that the act may be cited as the Commonwealth Bank Savings Bank Act 1927, practically commits us to the remaining provisions of the bill. That has not been held to be the case with previous statutes. I specifically instance the establishment of the rural credits department. The short title of that measure is the Commonwealth Bank Rural Credits Act 1925. The passing of this clause merely commits honorable members to a certain form title, and it is, of course, necessary to have a distinguishing title.
If the memorandum were prepared it would merely show section 35, which is to be repealed, in erased type, and the new sections in black type. As the new sections areself-explanatory, nothing would be gained by that. Clause 5 of this bill, gives the new definitions in full, while clause 9 sets out in detail the purposes for which regulations may he made. The amendment suggested by the Opposition is, therefore, unnecessary to clarify matters. The other clauses are merely consequential, so that the preparation of a memorandum would not further assist honorable members to understand the bill.
– If the honorable gentleman does not prepare a. memorandum he will have to make dozens of explanations.
– If there is a sincere desire for additional information the Government will endeavour to supply it, but that must necessarily cause a certain amount of delay.
– I move -
Thatthe House do now adjourn.
It may assist honorable members if I indicate what we propose to proceed with to-morrow. The Lender of the Opposition (Mr. Charlton) expressed a desire’ that an opportunity should be given to honorable members to compare the proposed clauses of the Commonwealth Bank (Savings Bank) Bill with the act which the bill will amend. As was indicated by the Treasurer (Dr. Earle Page), the Government is always only too pleased to assist honorable members to understand any measure before the House, butthis bill presents very few difficulties. It is not the usual practice to provide a comparative copy of the act and the proposed amendments when dealing with a bill of this type, but it will be possible to prepare slips setting out the proposed alterations in a manner which should enable honorable members clearly to understand the proposed alterations. Those slips should be available to-morrow afternoon, and, whilewe arewaiting for them,we can proceed with the housing proposal, returning to the bill after the second reading of the housing bill.
Ir is necessary that the business of the House should progress more rapidly than has been the case to date. A considerable amount of time was allotted to the second reading of this measure, and I am afraid that itwill be necessary for the House to meet next Tuesday if both this and the Housing Bill are not disposed of during the presentweek. I mention that so that honorable members may have an opportunity to make any necessary arrangements.
.- Will the Treasurer (Dr. Earle Page) be good enough to lay on the table of the House the full text of the proposals which we re placed before the board of directors of theCommonwealth Bank in relation to the proposed housing scheme? This afternoon the honorable gentleman read a resolution carried by that board applying to some proposal, but he did not detail the proposal to enable ‘ honorable members fully to understand the resolution that was carried. The resolution read by the Treasurer implied that the board of directors.were considering the question of organizing and administering a housing scheme.
– The honorable member is not in order in discussing that question.
– I ask the Treasurer to be good enough to table the information.
– The discussions which took place between the board of directors of the Commonwealth Bank and myself were verbal. I put before the board the proposition that was in the mind of the Government, and the letter followed upon their consideration of the matter.
– What was the date of that letter?
– I think it was the 9th July, 1926, but I shall ascertain the exact date and shall also endeavour to secure any other data which will indicate to the House clearly the proposals placed before the board.
.- It is a. most remarkable thing that the only existing record of the discussions between the Treasurer and the board of directors of theCommonwealth Bank is the resolution which the honorable gentleman, read to thisHouse. The honorable gentleman should revive not only his own memory, but that of the directors, and enlighten the House as to what that resolution was. If his communications with the board were wholly verbal, why was it necessary for the board to place its opinion in writing, while retaining no other record; and what was the housing scheme which it was proposed to present? Further, why the covert threat, ofa meeting next Tuesday? If it is necessary to facilitate public business, why do not honorable members oppo- . site close their mouths? I never knew a more obliging opposition than the present. They speak but seldom, some not having spoken since the last election. Evidently they have not yet recovered from its effect. Yet as soon as one of them rises to say a few words the Prime Minister proceeds to threaten him. To make threats at this hour of the night, and at this time, is not only improper, but rude. Such threats should not be directed against the Opposition. There never has been an opposition more obliging to the Prime Minister and the Government than this one. The persons who have interrupted the Government, and held up the business of the House, are members sitting behind the Treasury bench. I suggest that at the next Ministerial caucus the Prime Minister should instruct his followers to sit silent, in order to give the members of the Opposition an opportunity to speak.
– I wish to remove a misunderstanding that appears to exist in the minds of the honorable members for Maribyrnong (Mr. Fenton) and Bourke (Mr. Anstey). I have on many occasions been appealed to by honorable members, in the strongest terms, to give them an indication as soon as possible of the business to be taken, so that they may make their arrangements accordingly. I assure honorable members that I was in no sense endeavouring to threaten them. Instead of waiting until Friday to let them know that we might have to meet on Tuesday, I mentioned the probability to-night.
Question resolved in the affirmative.
House adjourned at 10.12.
Cite as: Australia, House of Representatives, Debates, 19 October 1927, viewed 22 October 2017, <http://historichansard.net/hofreps/1927/19271019_reps_10_116/>.